After 22,000 layoffs in January 2008, U.S. employers cut payrolls by a further 63,000 jobs in February. This is the first instance of consecutive monthly declines in the last five years.
Meanwhile, a large number of people have stopped looking for jobs, finding the market to be too fragile.
In fact, the unemployment rate actually fell slightly in January — from 4.9% to 4.8% — as 450,000 people simply dropped out of the labor force.
Broad-Based Job Losses
The job losses, instead of remaining confined to the construction industry, have spread into many other sectors, with only the government, education, health care, and hospitality sectors remaining unaffected. Meanwhile, employment in the housing, lending, and auto industries has suffered the most.
Since the peak of the housing boom in September 2006, the construction industry has seen the loss of 331,000 jobs. More troubling still, even the strong manufacturing sector has not remained unaffected.
Businesses, for the most part, are not to be blamed for the losses. They began scaling back cautiously, at first only putting hiring on hold. Eventually, however, most were forced to begin slashing existing jobs.
Last month, retailers gave layoff notices to around 34,000 people, triggering fears that hard-pressed consumers are likely to severely restrict their spending.
Since November, the private sector has slashed an average of 47,000 jobs every month, and there is little hope in the near future for a turnaround.
The number of people continuing to receive unemployment benefits rose to 2.835 million in the week ended March 1, a 30-month high.
Federal Government’s Stimulus Package
"Losing a job is painful, and I know Americans are concerned about our economy. So am I," said President Bush recently.
Bush has signed a stimulus package that will offer tax rebates to many. An estimated 130 million households are expected to receive checks ranging from $300 to $1,800 under the provisions of the package.
However, it remains to be seen how much success the federal government's economic stimulus package can achieve in boosting the sentiments of a society hit hard by several economic woes.
How Long? How Deep?
Analysts differ on how long the current downturn will continue. While some fear it may prove worse than the 2001 recession, many refuse to consider it a byproduct of the structural problems of the country’s economy. Housing troubles and the credit crunch are temporary evils that should disappear soon, they hope.
The crash in the job market has further hurt sluggish consumer spending. According to the RBC Cash Index, consumer confidence slumped to the 33.1 mark in early March, the worst since the index began in 2002.
Until now, steady job and wage growth had helped the nation in offsetting the negative impacts of the housing and credit crises. But now, the crumbling job market is adding to the economic gloom in the country.
