This report shows that recent economic projections were overly optimistic.
The February employment report showed the labor market deteriorating at an even faster rate, with the unemployment rate rising from 7.6 percent to 8.1 in February. The economy lost 651,000 jobs in the month, but job loss for the prior two months was revised up as well. Job loss for the last three months is now reported at 2,013,000, an average of 671,000 per month.
Job loss continues to be disproportionately in construction and manufacturing. Construction lost 104,000 jobs in February; it has lost 512,000 jobs since September, 7.2 percent of employment in the sector. Employment in the non-residential sector is falling almost as rapidly as in the residential sector.
Manufacturing lost 168,000 jobs in February, bringing job loss in the sector to 845,000 since September, a decline of 6.3 percent. Hours per worker have also been reduced; the index of aggregate hours is down 9.6 percent since September. All sectors of manufacturing have been hit hard, but the auto sector has seen the sharpest decline, with employment down by 128,600, or 15.3 percent, since September. The hours index is down by 21.9 percent over this period.
Retail lost 39,500 jobs, bringing its loss since September to 318,300. Employment in auto dealers has been holding up in spite of the plunge in sales. Employment is down by only 167,000, or 13.4 percent, since the pre-recession peak, even though sales are down more than 30 percent. In the same vein, employment in real estate is down by just 70,000, or 4.7 percent, even though sales are down by 40 percent. In both cases, workers are paid largely on commission, and therefore have likely seen their wages slashed even though they still have their jobs.
Employment in trucking fell by 33,400 in February. It is down by 88,000 since October, a drop of 6.5 percent. This reflects the huge decline in goods being shipped. The employment services sector lost 87,500 in February. As a result of a sharp downward revision to prior data, this sector reportedly lost 402,000 jobs, 13.2 percent of employment, since September.
The rise in the unemployment rate was accompanied by a 0.2 percent drop in the employment rate. The 3.1 percentage point drop in the employment rate already exceeds the decline in any downturn since 1948. Men have been disproportionately hit by the downturn, with their unemployment rate rising by 3.8 percentage points over the last year to 8.1 percent. The unemployment rate for women rose by 2.4 percentage points to 6.7 percent. This gap is not surprising, with construction and manufacturing as the big job losers.
Black men saw a 6.9 percentage point jump in their unemployment rate over the last year to 14.9 percent. The employment rate for black teens dropped to 17 percent, the lowest level on record. The unemployment rate for Hispanics hit 10.9 percent, up 1.2 percentage points from January and 4.6 percentage points from last February.
Unemployment has risen sharply for workers at all education levels. The 12.6 percent rate for workers without a high school degree is 5.2 percentage points above the year ago level. The 4.1 percent unemployment rate for college grads is nearly double the 2.1 percent rate of last February, and 0.7 percentage points higher than the previous high in 1992, when this series was first published.
The number of people involuntarily employed part-time rose by 838,000 in February and is now 3,753,000 above its year ago level. This is consistent with the sharp decline in hours in the establishment survey.
The one piece of somewhat good news in this report is that wages are continuing to rise, with nominal wages rising at 3.5 percent annual rate over the quarter. However, everything else in this report is extremely bad. The economy is in a free fall with no obvious brakes in place. The recent forecasts, used in analyzing the stimulus and the budget, which projected 8.5 percent unemployment for the 4th quarter, now look impossibly optimistic. The unemployment rate is likely to hit 8.5 percent by March and will almost certainly cross 9.0 percent by the early summer. Without substantial additional stimulus, it could cross 10 percent by year-end.