(MarketWatch) -- Based on the old rule of thumb that a recession is when you lose your job and a depression is when I lose mine, 650,000 families fell into a depression in February, according to the latest forecasts.
The Labor Department will release its latest snapshot of the job market on Friday at 8:30 a.m. Eastern. Economists are predicting nonfarm payrolls fell by 650,000 in February, the largest one-month job loss in almost 60 years as the recession tightened its grip on the economy.
The unemployment rate probably rose to 8%, the economists said, up from 7.6% in January and up 1.8 percentage points in the past six months, the fastest increase in more than 30 years. It would mean that a record 4.2 million jobs will have been lost since the recession began in December 2007, with no end in sight.
February could mark the worst month of job losses in the recession, even if the losses continue at a slower pace for months. Payroll growth typical lags behind any pickup in the economy.
The consensus of private forecasters is for the unemployment rate to get close to 9% next year, with some forecasters looking for a 10% rate. The Federal Reserve doesn't expect the unemployment rate to fall below 7% until 2011.
And remember: These forecasts assume the Fed will slowly be able to get credit flowing again, and that the recently approved fiscal stimulus will give a significant boost to the economy.
With output still falling at a dizzying rate, most companies are shedding unneeded workers and cutting back the hours of those remaining.
Strapped by debt and seeing their paper wealth evaporating, many consumers are spending as little as they can. At the same time, companies are postponing plans to buy equipment to expand production until the storm passes. "Even when demand does stabilize, production will likely lag as companies seek to trim unwanted stocks" of unsold goods, wrote Richard Berner, chief U.S. economist for Morgan Stanley.
Horrendous payroll numbers.
If the economy did shed 650,000 jobs in February as expected, it would be the third largest monthly loss on record, dating back to 1939. The record was set in September 1945, when nearly 2 million people lost their jobs after the Allies won the most destructive war in history and industry was retooling for peacetime, sending "Rosie the Riveter" back to her knitting.
In October 1949, 834,000 jobs were lost when almost all the nation's steelworkers went on strike in the final month of a brutal but short recession. Of course, the size of the workforce is much larger today than it was in 1949 or 1956. But as a proportion of the workforce, job losses during this recession have been staggering. If February's losses are as expected, it would be the fourth straight month of job losses of more than 0.4% of payrolls, matching the longest such stretches in the post-war era.
If 650,000 jobs were lost in February, it would bring total losses in this recession to about 3.1% of payrolls, matching the losses in recessions of 1949, 1954 and 1982. Next on the list: 4% in 1958 and 6.9% in 1945.
Behind the forecasts.
The main evidence for a worsening job market has been the rise in unemployment benefits. First-time claims have risen decisively over 600,000, nearly double the level at the beginning of the recession. Continuing claims are at an all-time high. Consumer surveys also show extreme pessimism about finding a job.
The employment index in the Institute for Supply Management survey fell to a record low in February. While some forecasters think job losses in February stayed in the ballpark of about 590,000, others think the labor market got much worse in February and are expecting losses of 650,000, 700,000, or in one case, even 800,000.
"February was the worst month yet," said Global Insight's Brian Bethune and Nigel Gault, who are predicting payroll losses of 750,000 and an employment rate of 8%. Others have a slightly less dire view, if a loss of 625,000 could be considered upbeat. "Our sense, admittedly based mostly on anecdotes, is that labor market conditions remain dismal but are not necessarily accelerating to the downside," wrote Stephen Stanley, chief economist for RBS Greenwich Capital.
Economists expect the number of hours worked to continue plunging as more workers are forced into part-time shifts. In January, 7.8 million workers wanted to work full time but could only get part-time work, a number that's risen by 3.2 million since the recession began.
The Labor Department will release its latest snapshot of the job market on Friday at 8:30 a.m. Eastern. Economists are predicting nonfarm payrolls fell by 650,000 in February, the largest one-month job loss in almost 60 years as the recession tightened its grip on the economy.
The unemployment rate probably rose to 8%, the economists said, up from 7.6% in January and up 1.8 percentage points in the past six months, the fastest increase in more than 30 years. It would mean that a record 4.2 million jobs will have been lost since the recession began in December 2007, with no end in sight.February could mark the worst month of job losses in the recession, even if the losses continue at a slower pace for months. Payroll growth typical lags behind any pickup in the economy.
The consensus of private forecasters is for the unemployment rate to get close to 9% next year, with some forecasters looking for a 10% rate. The Federal Reserve doesn't expect the unemployment rate to fall below 7% until 2011.
And remember: These forecasts assume the Fed will slowly be able to get credit flowing again, and that the recently approved fiscal stimulus will give a significant boost to the economy.
With output still falling at a dizzying rate, most companies are shedding unneeded workers and cutting back the hours of those remaining.
Strapped by debt and seeing their paper wealth evaporating, many consumers are spending as little as they can. At the same time, companies are postponing plans to buy equipment to expand production until the storm passes. "Even when demand does stabilize, production will likely lag as companies seek to trim unwanted stocks" of unsold goods, wrote Richard Berner, chief U.S. economist for Morgan Stanley.
Horrendous payroll numbers.
If the economy did shed 650,000 jobs in February as expected, it would be the third largest monthly loss on record, dating back to 1939. The record was set in September 1945, when nearly 2 million people lost their jobs after the Allies won the most destructive war in history and industry was retooling for peacetime, sending "Rosie the Riveter" back to her knitting.
In October 1949, 834,000 jobs were lost when almost all the nation's steelworkers went on strike in the final month of a brutal but short recession. Of course, the size of the workforce is much larger today than it was in 1949 or 1956. But as a proportion of the workforce, job losses during this recession have been staggering. If February's losses are as expected, it would be the fourth straight month of job losses of more than 0.4% of payrolls, matching the longest such stretches in the post-war era.
If 650,000 jobs were lost in February, it would bring total losses in this recession to about 3.1% of payrolls, matching the losses in recessions of 1949, 1954 and 1982. Next on the list: 4% in 1958 and 6.9% in 1945.
Behind the forecasts.
The main evidence for a worsening job market has been the rise in unemployment benefits. First-time claims have risen decisively over 600,000, nearly double the level at the beginning of the recession. Continuing claims are at an all-time high. Consumer surveys also show extreme pessimism about finding a job.
The employment index in the Institute for Supply Management survey fell to a record low in February. While some forecasters think job losses in February stayed in the ballpark of about 590,000, others think the labor market got much worse in February and are expecting losses of 650,000, 700,000, or in one case, even 800,000.
"February was the worst month yet," said Global Insight's Brian Bethune and Nigel Gault, who are predicting payroll losses of 750,000 and an employment rate of 8%. Others have a slightly less dire view, if a loss of 625,000 could be considered upbeat. "Our sense, admittedly based mostly on anecdotes, is that labor market conditions remain dismal but are not necessarily accelerating to the downside," wrote Stephen Stanley, chief economist for RBS Greenwich Capital.
Economists expect the number of hours worked to continue plunging as more workers are forced into part-time shifts. In January, 7.8 million workers wanted to work full time but could only get part-time work, a number that's risen by 3.2 million since the recession began.
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