The job report released by the Labor Department this morning was dimmer than most people had projected. The expectation had been that we would see around 200,000 job cuts, according to the Associated Press (AP), so the actual number that came in--240,000--was a little surprising. That wasn’t the biggest shocker, though: The biggest surprise came in the updated numbers from September’s job loss report. Previously, it was reported that we had lost 159,000 jobs in September, but that number was revised to 284,000 in the newest report. These numbers helped push the unemployment rate to a 14-year high of 6.5 percent and put the total number of jobs lost this year at 1.2 million, and it doesn’t appear that things are going to get better anytime soon.
One thing to keep in mind is that the Labor Department has been consistently under-reporting initial jobless claims. In August, the initially reported 73,000 was later revised to 127,000. It looks like their initial numbers have been coming at around 56 to 57 percent of the actual numbers, so with that in mind, the real numbers for October might end up closer to 420,000. Before we get too caught up in that number though, what about November and December?
If the automakers aren’t rescued, as I discussed in my blog post yesterday, we could be looking at huge number of job losses as a result of one or more of the major carmakers failing. A report issued by the Center for Automotive Research said potential job losses stemming from a major failure in the U.S. auto industry could be as high as 2.5 million. Add even a fraction of that number to everything else that is going wrong in the economy right now and you can see how unemployment could quickly spiral out of control.
This holiday season looks like it is going to be a painful one for consumers and retailers alike. The way almost all economic and financial numbers are coming in worse than projected right now, I shudder to think what the numbers are going to look like for retailers. Of course it doesn’t stop there, though; if retailers struggle, that will trickle down via more layoffs and store closures. Store closures are bad news for commercial landlords, and so on and so forth. This is unlikely to end anytime soon, and it is doubtful that president-elect Obama is going to be able to magically make everything better. We are in a recession and it is going to take time to rebound, so be prepared.