Latest Report Show Moderation Of Job Losses
The Labor Department released it’s August job’s report on Friday which show the rate of job losses are slowly declining from the start of the year when monthly losses were averaging over 700k. The labor situation is slowly getting better but it may be another few months before job creation starts again.
Nonfarm payroll employment continued to decline in August (-216,000), and the unemployment rate rose to 9.7 percent, the U.S. Bureau of Labor Statistics reported today. Although job losses continued in many of the major industry sectors in August, the declines have moderated in recent months.
The labor market typically lags behind the rest of the economy as businesses reallocate resources and many experts believe it won’t be until the start of next year before the labor market starts it’s own recovery. We saw a large jump in job losses following the collapse of Lehman Brothers at the height of the financial crisis and the economy has shed nearly 7 million jobs since the beginning of the recession.
The situation will be slow to improve as the economy has mostly depended on massive government spending, in the absence of consumer spending, to work it’s way out recession. The job creation aspects of this year’s stimulus package will take a couple more years before the economy sees the full benefit so even when the losses do stop, the unemployment rate could be moderately high for some time.
Economists still feel the rate will hit double digits before the year is out but by all appearances the worst appears to be over. The Fed also appears to be committed to keep interest rates at their current level for some time which should also help matters as credit markets slowly return to normal and businesses gain access to much needed capital.
