I cribbed that title from Paul Krugman’s New York Times blog* today but I think he’s right. It has begun.
“It” is a recession, and its official start will either be December 2007 or January 2008 once the numbers are evaluated to everyone’s satisfaction. This is the second recession of the Bush Administration, by the way. The first one was the dot-bomb recession in 2001, which was followed by a jobless recovery.
Payrolls were down in 22,000 in January and today, the Bureau of Labor Statistics (BLS) announced 63,000 jobs were lost in February. The unemployment rate dropped from 4.9% to 4.8%, reflecting a shrinking labor force as some people gave up looking for work.
In December, Krugman wrote that people remember the last recession as brief and mild. But that’s an artifact of the way the National Bureau of Economic Research defines recessions — basically as periods when everything is going down. Once something starts going up (usually GDP), it’s labeled a recovery. But in the last two recessions the thing that matters most — employment — kept falling long after the official end of the recession. What finally created a convincing recovery was the housing boom. But that turned into a bubble, which has burst big time.
McClatchy Newspapers reported last month that employment figures, released in late January, showed a 52-month streak of job creation ending with a loss of 17,000 jobs in January. The administration acknowledged the contraction, but pointed to the national unemployment rate of 4.9% to say that the labor market wasn’t a harbinger of recession. (But then the administration didn’t consider the possibility that gas would hit $4 a gallon this summer either.)
A closer look at unemployment data by McClatchy, however, found that jobless Americans are spending more time looking for work and that those who can’t find work now make up a greater share of the unemployed. Several measures of unemployment, in fact, show that the workforce is under the kind of stress not seen since March 2001, when the U.S. economy entered a nine-month recession, followed by a so-called jobless recovery.
Like much in economics, labor statistics are vexing because they can be seen as a glass half empty or half full. In this case, it’s definitely half empty: “A weakening job market, combined with lower home values, higher fuel bills and stricter lending rules, raises the odds consumer spending will keep slowing,” according to Bloomberg.com.
On March 2 I gave a talk at Pittcon about the employment outlook for chemical scientists. BLS is projecting that employment for chemists is expected to grow 9% between 2006-2016. I also reported that the job market was looking pretty good for the coming year, based on my conversations with employer reps and department chairpersons for our Employment Outlook issue.
I’ll be curious to see how things fall out as the year progresses.
Corinne Marasco is Senior Editor for ACS News & Special Features at Chemical & Engineering News.