Double Digit Unemployment Looks More & More Likely

You’re Fired!  That is what the Labor Department is dealing with on a growing basis.  The January unemployment rate of 7.6% just got replaced by a number of 8.1% for February.  And the non-farm payrolls contracted by a rate of -651,000.

Bloomberg had the consensus estimates at 7.9% for unemployment and expected the change in non-farm payrolls to come in at -648,000 for February compared to an initial report of -598,000 in January.  Dow Jones had a consensus estimate of 8.0% on the unemployment rate. Unfortunately, those January payrolls numbers were revised to -655,000.

The only offset was government and then education and healthcare.  Every other sector lost jobs.  The losses were in goods producing, construction, manufacturing, services, retail trade, professional and business, and leisure and hospitality.

The economists keep saying that unemployment is a lagging indicator.  Does it feel lagging?  Our original target of 8.5% unemployment this  summer looks like it might just be a speed bump.

The government and many corporate leaders seem to be expecting double-digit unemployment.  We haven’t endorsed that notion, at least not yet.

Jon C. Ogg
March 6, 2009