U.S. Jobless Rate Soars as Payrolls Plunge by 598,000 (Update2)

By Shobhana Chandra

Feb. 6 (Bloomberg)

HIGHLIGHTS:

• Unemployment Rate: Rose to 7.6 percent from 7.2 percent in December - the highest level since 1992.
  
• Payrolls Fell: 598,000, the biggest monthly decline since December 1974. Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance.
  
• James Galbraith: Economics professor at the University of Texas in Austin stated, "We are in the middle of a very severe, a violent, collapse in activity and it could go on for months,” today on Bloomberg television.
  
• Since the Start of the Recession: In December 2007 , 3.57 million of job losses marks the biggest employment slump of any economic contraction in the postwar period.
• Average Work Week: remained at 33.3 hours in January. Average weekly hours worked by production workers fell to 39.8 hours from 39.9 hours, while overtime decreased to 2.9 hours from 3 hours. Average weekly earnings rose by $1.67 to $614.72.
  

Comments

Rising Unemployment Rate: No surprise there. Everyday we hear more and more companies trimming back to adjust to the new economic realities of a deflationary negative feed back loop. The opposite of prosperity, you cut than they cut and like a virus it spreads resulting in the immediate solution becoming part of the big problem.

Where is all the Money? Waiting on the sidelines. Yes, that may be partially true but what about:

• 401k Holders: They have taken a real equity and Dividend /Interest Rate hit regarding payout values.
• Home Owners: How much equity do I have in my home? Less - alot less depending on where you live with no immediate relief in sight.
• De-leveraging and Saving: As the economy tries to right itself we are seeing the de-leveraging of financial institutions and consumers increasing savings. Sounds reasonable, however, the result is less money is available for lending combined with the consumer now trying to build up their savings. Suggesting -- a negative short term implications for the economy as it adjusts to the new dynamics.
  
• Job Losses: Many of those well paying jobs in Real Estate, Banking, Auto, and Financial Services have disappeared and will never come back. A plan B is clearly needed to help bump us all in another direction and slow the free fall.
  

Conclusion

It should be obvious to all of us that we need to take a new direction with fresh faces, ideas, along with a dash of imagination. It will not be easy with full recovery down a long dusty road.

We need to explore and execute innovative solutions to help get people back to work and productive. That will cost us - - no tax cut will generate the depth and breathe of job creation that will be needed.

Finally, fear is quickly becoming our biggest enemy. Folks, we need to try and pull together on this one. We are all on the same economic ocean liner that is sinking, even if you think first class is higher up and you won't get wet - - Please realize that the rip in the bow of this wonderful ship is huge and needs all hands on deck to repair.

James Monachino