Jobless Rate Hits 8.5% as March Payrolls Fall by 663,000

Jobless Rate Hits 8.5% as March Payrolls Fall by 663,000
By JACK HEALY
Copyright by The New York Times
Published: April 3, 2009
http://www.nytimes.com/2009/04/04/business/economy/04jobs.html?hp


The American economy shed another 663,000 jobs in March, the government reported Friday, bringing the toll of job losses during the recession to 5.1 million.

The Bureau of Labor Statistics reported that the national unemployment rate climbed to 8.5 percent from 8.1 percent in February, its highest levels in a quarter-century, as employers raced to cut their payroll costs. It was the 15th consecutive month of job losses.

The figures offered a stark contrast to some recent glimmers of life elsewhere in the economy, which have buoyed stock markets and heartened hopes for a turnaround. The sharp and continuing increase in unemployment suggests that even if the downward spiral is beginning to level off, job losses are likely to keep piling up for the rest of this year and into 2010.

“The hemorrhaging of jobs has been so extreme,” said Andrew Stettner, deputy director of the National Employment Law Project. “Even if the economy picks up or the contraction slows, there’s so much slack in the job market, it’s going to take a tremendous amount of time for it to recover.”

Although the Federal Reserve expects unemployment to crest near 8.8 percent, many economists say it will rise above 10 percent and will only begin to ebb after the broader economy is well on the way to recovery — a wrenching forecast for the 13.2 million people in the United States who are currently unemployed.

In all, nearly 16 percent of the people in the United States are now looking for a job, working part-time because they cannot find full-time work, or are out of work and not actively looking, the government said.

“We’re closing in on 25 million people that are underemployed in one way or another,” said Mark Zandi, founder and chief economist of Moody’s Economy.com. “It highlights the incredible breadth of the downturn.”

The agency also drastically revised the job losses in January to 741,000 from the earlier report of 655,000, but left February’s job loss estimate of 651,000 unchanged.

“There is no letup,” said James O’Sullivan, senior United States economist at UBS. “The trend has been truly dismal.”

Perhaps more troubling, economists said, forward-looking signals of the jobs market continued to tumble downward, indicating that April is likely to be another grim month. The average workweek fell to a seasonally adjusted 33.2 hours, the lowest level on record, and temporary jobs continued to shrink.

More than two million jobs disappeared in the first quarter of the year as the country reeled from the shock of the financial crisis of late 2008.

Now, as the downturn drags on and the ranks of the unemployed swell, people are beginning to languish without work. Some 24 percent of people have been unemployed for six months or more, and fewer and fewer are able to find a job after less than five weeks of looking.

Still, economists said they believed the rate of job losses would moderate slightly by summer as the government’s measures to patch up the financial system, revive consumer spending and put people to work wash through the economy.

Workers are starting to see tax credits from the $787 billion stimulus package show up in their paychecks, and government-financed projects to build bridges and repair roads are ramping up.

“The fiscal stimulus is just really starting now,” Mr. O’Sullivan said. “That’s all in front of us. We do think the weakness is going to fade in the next months.”

President Obama has promised that the stimulus plan — the American Recovery and Reinvestment Act — will save or create three million to four million jobs over the next two years. But if the monthly job losses do not at least show a hint of easing by the summer, economists worry that the tentative signs of hope will burn out as businesses and consumers brace for an even more difficult and protracted downturn than they had expected.

“All these nascent signs of a better economy will fade if these jobs loses don’t abate soon,” Mr. Zandi said. “Retail’s going to weaken again, housing’s going to weaken again and the policy response will be inadequate. We’ll have to go to Plan B.”

Manufacturing companies shed another 161,000 jobs in March. The construction industry, which has been devastated by the collapse of housing sales and prices, lost 126,000 jobs. Even government, which had been adding jobs during the downturn, lost 5,000 positions as state and local governments saw their tax revenues plummet.