JOB LOSSES WILL LAST FOR YEARS
By Daniel at 6 May, 2009, 10:18 pm
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from Art Cashin, UBS senior market analyst:
“a recent commentary by Jim Welsh of Welsh Money Management.
LARGE JOB LOSSES
In the first three months of 2009, more than 2 million jobs were lost, causing the unemployment rate to jump from 7.6% to 8.5%, the highest since November 1983.
The unemployment rate increased in March in 46 states, with California, the world’s eighth largest economy, hitting 11.2%, the highest since January 1941.
Underemployment, which combines the unemployed, with involuntary part time workers and discouraged workers, reached 15.6%.
Changes in temporary jobs lead job growth / decline in the overall labor market by 6 to 10 months. In March, employers cut 71,700 temporary workers.
CONSUMER DEBT DEFAULTING
The American Bankers Association reported that 3.22% of consumer loans were delinquent at the end of 2008. That is the highest level since the ABA began tracking overall loan delinquency rates in the mid
1970’s.
And that was before 2 million jobs were lost in the first quarter. An average of 5,945 bankruptcy petitions were filed each day in March, up 9% from February and 38% from a year ago.
PRIME MORTGAGE DEFAULTS RISING
According to the American Bankers Association, 5.06% of prime borrowers have missed at least one mortgage payment. This represents 1.8 million mortgages. Delinquency rate for sub prime mortgages is up to 21.9%, it only accounts for 1.2 million mortgages.
Mr. Welsh not only cites the massive job losses and their impact as their consequences work through the system, he notes the daunting challenge to get back to normal:
JOB CREATION NEEDS ARE MASSIVE
The economy needs to create 125,000 jobs each month, just to absorb the number of new entrants into the labor market.
If job growth were to average 325,000 per month in coming years, it would still take four years to replace all the jobs lost in this recession.
He even demonstrates how some of those improved bank earnings we saw recently may have been the result of accounting sleight of hand.
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