Global Insight: Unemployment experience
A disaster of historic proportions is still unfolding in the US labour market, where the pace and depth of job losses already make this the worst recession in half a century.
The economy has lost more than half a million jobs in each of the past six months. Even if output soon bottoms out, unemployment is likely to continue to rise from its present level of 8.9 per cent to at least 9.5 per cent and probably higher.
Meanwhile, long-term unemployment is also soaring, bringing with it the danger that the US may suffer a permanent increase in structural unemployment of the kind experienced in many parts of Europe after previous recessions.
Huge job losses have become so familiar that the loss of 539,000 jobs in April – with 611,000 private sector positions gone – was hailed by some as good news. The rate of job losses was slightly lower than earlier this year. But by any historical standard this was a horrific figure, worse than the worst month for job losses in each of the past four recessions. Even adjusting for the size of the labour force, which has grown in recent decades, this recession stands out as a jobs killer, with a 4.2 per cent decline in employment to date.
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