Staggering Job Losses: What Do The Numbers Tell Us?

A couple of reports, one in the Guardian and the other in the New York Times, highlight the toll that the recession is taking on jobs.

The NYT article notes that today U.S. companies announced job cuts totaling 45,000 employees. The Guardian article notes that today over 67,000 job cuts were announced across Britain, Europe and the U.S. Note that no one has estimated the toll on the Asian economies.

Two questions occur to me. First take a look at the graph below.

It demonstrates the point that unemployment tends to lag recovery. That’s of no comfort to those who are losing their jobs but it does tell us something about where we might be in this recession. Or it might tell us nothing at all. If the job cuts that we have seen today are the beginning of a trend then not much other than that we are mired in a deep recession that may get worse can be inferred. If, on the other hand, this represents capitulation of a sort then it might make some sense to infer that a turnaround may be closer than most think.

The other observation I have is really more of a question. To what extent are these job losses permanent? Given all the talk about the “new normal” and a period of reduced consumption, doesn’t it make sense that we eventually end up at a point of lower output and thus lower demand for labor? That’s not a particularly happy thought but maybe one we need to start talking about.

There is a lot of shooting from the hip in this post. I’ll go ahead and put it up anyway and everyone can take their shots. Just think that we need to start looking at this whole situation from some different angles. There seems to me to be a lot of group think going on.

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