November Bloodletting, as Employers Shed Jobs

The U.S. Labor department was the bearer of yet more bad news Friday, when it reported the nationwide unemployment rate reached an astounding 6.7 percent in November, shedding 533,000 nonfarm jobs — the 11th straight monthly decline and the largest since December of 1974. It’s only the fourth time in the past 58 years that payrolls have fallen by more than 500,000 in a month, according to a Market Watch report. “This is a huge downshift, much larger than we thought,” Jared Bernstein, an economist at the Economic Policy Institute in Washington, who will be Vice President-elect Joe Biden’s chief economist in the new administration, told Bloomberg News. In November, “job losses were large and widespread across the major industry sectors,” according to a Labor Department report, with the exception of health care, which continued to add jobs. The employment services industry was severely hit, losing 101,000 jobs over the course of the month, as was retail trade, posting 91,000 job losses. Financial services cut 34,000 jobs. And not surprisingly, fewer than a third of industries were hiring in November. An alternative assessment of unemployment – which includes discouraged workers and those whose hours have been cut back to part-time – rose to 12.5 percent in November from 11.8 percent. The number of workers forced to work part-time rose by 621,000 to 7.3 million. Paul Krugman, who won the Nobel prize in economics this year, posted yesterday his “worries about next year” in his New York Time’s opinion column. “I’ve been ruminating over economic prospects for next year, and I’m getting scared,” Krugman wrote. The economy is falling fast and infrastructure spending will take time to get going, he said. A stimulus may not gain traction until 2009. “[I]’m wondering: will it, in fact, even be possible to pull the conomy out of its nosedive before unemployment goes into double digits?…” Since the start of the recession in December 2007, the number of unemployed persons has increased by 2.7 million. News of spiraling job losses amid an already unstable economy may mean lower interest rates — the fed funds rate already sits at one percent. And in a speech Monday, Fed Chairman Ben Bernanke called further rate reductions “certainly feasible.” Write to Kelly Curran at [email protected].