Economics commentary number: SL Number 4
Title of extract: The Incredible Shrinking U.S. Job Market
Source of extract: Forbes
Date of extract: 08/02/2009
Word count: 730 words
Date the commentary was written: 24/02/2009
Sections of the syllabus to which the commentary relates: Section 3
The Incredible Shrinking U.S. Job Market
Carl Gutierrez and Maurna Desmond, 02.08.09, 12:00 AM EST
Employment situation likely to go from bad to worse in the short run.
U.S. joblessness is at its worst level in decades, and further deterioration is in the cards.
The Labor Department reported Friday that 598,000 private sector jobs were lost in January, pushing the unemployment rate to 7.6%, up from 7.2% in December. (See "U.S. Jobs Hemorrhage In '08.") Economists had expected only 540,000 jobs would be eliminated, with an unemployment rate to 7.5%.
The amount of Americans out of work will probably grow.
The labor market lags behind economic output, and with the U.S. economy widely expected to contract in the first half of the year, the unemployment rate could reach 9.0%. Even with the best-case scenario of an economic turnaround in the second half of 2009, the labor market wouldn't see an improvement at least until the end of the year.
"It's going to get worse before it gets worse," said Doug Roberts, chief investment strategist for Channel Capital Research.com.
The massive jobless figure actually led to significant market gains Friday, as investors bet the shock would move Congress into passing President Barack Obama's economic stimulus package.
Mark King, chief investment officer for Bell Investment Advisors, said it would take a double-digit employment rate to provoke a decline in stocks, indicating that Wall Street has already built a lot of pessimism into stock prices.
U.S. Treasury bonds, on the other...