One of the key features of the employment report is the ongoing downward revisions to previous month’s reports. I took the time to download the real time data from the Philly Fed. The dashed line shows the number of job losses reported with the initial report. The sold line shows the monthly job loss as reported in the March 6th employment report. These revisions are unusual. The BLS’s methods are quite good and to get systematic revisions are unusual.
In particular, these revisions combined with the benchmark revision reported last month, have substantially lowered the level of December employment. Let me give one statistic in particular (and I only bring this statistic up because I was right). On December 11, I wrote a post predicting a loss of 933,900 jobs in December. Well, and this is completely meaningless, the difference between level of November employment as I knew it then and the level of December employment as we know it now is 938,000. Not bad for a Chicago-trained economist. Enough of that! Just keep in mind that we are still one benchmark away from knowing the job losses in the last 9 months of 2008. I suspect we will have another big round of markdowns to sort through next February.

In 2000, the world changed. Between January 2000 and January 2004, the United States lost 20 percent of its manufacturing labor force and it never got it back. As of this report, we have lost almost 30 percent of our manufacturing workforce since January 2000. I hope these jobs come back but at the moment it does not look promising.

In particular, the service sector has proven to be a source of stability over time. Service-sector job losses have tended to be much smaller than manufacturing losses. (We can argue about deviation from trend but I only care about outright losses at the moment.) Unfortunately, this recession has not confined itself to the manufacturing sector.
Take a look at the picture below. Job losses in the service sector are staggering. The service sector accounts for about half of the job losses to date, 2.1 million jobs in the last twelve months. In percentage terms, the twelve-month loss of jobs is 30 percent higher than the next biggest loss (recorded in 1949).

1 comment:
Yes, the news is grim, but you are doing a fine job. Keep it up. JA
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