Seven days into the New Year, our problems from 2008 have managed to follow us into 2009. Go figure.
The year itself may have changed, but as always is the case, little else has changed with it. So we woke up on January 2nd in pretty much the same world we left.
Unfortunately, that was in a world with an economy that has fallen and can’t seem to get up.
Of course, today’s unemployment figures from ADP only underscored that theme as the payroll company’s most recent data showed that about 693,000 private sector jobs were lost in December.
That topped analyst estimates and sent the markets into a post-New Year’s tail spin.
Here’s the skinny on the report that caused the slide…
From Bloomberg by Bob Willis and Courtney Schlisserman entitled: U.S. Economy: Companies Cut Payrolls at a Faster Pace
“Reports issued two days before the release of U.S. jobless data showed private employers cut payrolls at a faster pace in December, threatening to send the unemployment rate to levels unseen in a quarter century.
“The level of unemployment is going to be higher” and may exceed 10 percent, Martin Feldstein, the former National Bureau of Economic Research president and Harvard University professor said in a Bloomberg Television interview. “It’s really bad and it needs a fix,” he said before a hearing on the fiscal-stimulus plan with House lawmakers in Washington.
Companies cut an estimated 693,000 jobs in December, the most since ADP Employer Services began its gauge based on payroll data in 2001. Chicago-based Challenger, Gray & Christmas Inc. said firings announced by U.S. employers rose 275 percent last month from December 2007, to 166,348.
The drop in the ADP gauge was larger than the median estimate of a 495,000 decline in a Bloomberg News survey of 24 economists.
“Unemployment is going to rise to 8.5 percent by mid-year, and our hope is that it stops there,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York; the jobless rate was 6.7 percent in November. “It’s taking away labor income from consumers, and that’s going to be a further drag on consumer spending. If you’re not generating enough demand, it’ll entail further cuts in production.”
The Labor Department may report that employers slashed jobs in December for a 12th consecutive month, putting total job cuts at 2.4 million for 2008, according to a Bloomberg survey median.
Today’s ADP report is the first to reflect methodological changes that ADP says will narrow the differences between its calculations and the government’s payroll numbers.
Revised figures issued Dec. 18 by ADP and Macroeconomic Advisers showed the discrepancies with Labor Department data narrowed considerably using the new approach. The new data put ADP’s estimate of job losses from September through November at 1.03 million, more than double its prior projection and closer to the government’s figures showing a decline of 1.29 million in private payrolls for the period.”
So how bad has unemployment gotten these days? The answer is bad enough to swamp the system.
From the AP By Richard Richmyer entitled: State unemployment claims systems overwhelmed
“Electronic unemployment filing systems have crashed in at least three states in recent days amid an unprecedented crush of thousands of newly jobless Americans seeking benefits, and other states were adjusting their systems to avoid being next.
About 4.5 million Americans are collecting jobless benefits, a 26-year high, so the Web sites and phone systems now commonly used to file for benefits are being tested like never before.
Even those that are holding up under the strain are in many cases leaving filers on the line for hours, or kissing them off with an “all circuits are busy” message. Agencies have been scrambling to hire hundreds more workers to handle the calls.
Systems in New York, North Carolina and Ohio were shut down completely by technical glitches and heavy volume, and labor officials in several other states are reporting higher-than-normal use.
Some states attribute the increase in call volume in part to an extension of federal emergency unemployment compensation from 13 weeks to 20 weeks in late November. More than 54,000 Pennsylvanians had exhausted their federal benefits after 13 weeks by the time that occurred, said David Smith, a spokesman for the Pennsylvania Department of Labor and Industry.
“It really was a perfect storm,” he said.”
Friday’s jobs number looms larger than ever….