The US unemployment rate in September was 6.1%. The consensus estimates are that the numbers will rise, but there are differences over how much. The Bloomberg News survey of economists gives an average prediction of a loss of another 200,000 jobs in October. That would be the largest erosion in five years and would take unemployment to 6.3%

Several analysts have more pessimistic forecasts of an increase of 250,000 people out of work compared with September, putting the jobless rate at 6.8%.

It is not unusual to hear educated speculation that the level of unemployment in the US will go as high as 7.5% next year.

All of these numbers may be much too low. What if the economy were to lose three million jobs over the next five quarters instead of as little as one million? That would take unemployment near 10%. The jobless rate hit just under 9% in the 1974 recession and hit 10.2% in 1982. That level is higher than it had been since WWII and has never been surpassed since then.

It is not very hard to account for where three million more jobs might be lost. In the retailer sector, there are several large companies such as Sears (SHLD) which employ several hundred thousand people each. If this holiday’s sales are as bad as experts expect, it would not be shocking to see 500,000 jobs fall out of this part of the labor force.

In the automobile industry, some estimates are that a GM (GM) combination with Chrysler could put 60,000 people out of work. If Chrysler’s is sold off in pieces, nearly as many people may lose jobs. The car parts industry employees tens of thousands of workers. There will be as much fall-out in that part of the sector as there will be at the Big Three themselves. Almost no one is predicting a recovery of car sales until 2010.

The restaurant and hospitality industries are expected to be hit very hard as travel drops and more people are forced to eat all of their meals at home. Some of the largest firms in these sectors employee well in excess of 100,000 each and there are tens of thousands of small restaurants around the country. The idea that this portion of the job pool could lose several hundreds thousand workers is not out of the question.

While layoffs in the banking and financial sectors have already been painfully significant, there are bound to be more. The consolidation that has taken down companies including WaMu, Countrywide, Bear Stearns, Lehman, Wachovia, and NCC is not at an end. Several large regional banks and brokerage operations which have over 10,000 employees each could become part of future acquisitions if the mortgage and consumer credit disasters get even worse.

Three million jobs seems like a great deal, but, industry-by-industry, it is not terribly hard to get there.

Douglas A. McIntyre

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