Friday, April 04, 2008

Moderate payroll job loss still doesn't add up to a full-blown recession

Although the loss of another 80,000 nonfarm payroll jobs certainly points in the direction of a possible recession, the loss to date is still too modest to indicate that we are in the middle of a recession. Granted, job losses can be quite modest at the outset of a recession, but sometimes modest job losses do not result in a recession. At present, the peak for payroll employment occurred in December, followed by losses of 77,000, 76,000, and 80,000 for a total of 233,000. For comparison, the loss of payroll jobs in April 2001 alone was 281,000. OTOH, March 2001 was considered by the NBER BCDC to be the start of a recession and losses through March totaled only 30,000 from the employment peak in January 2001.

In short, although we cannot conclude from the current data that we are not in a recession, we also cannot conclude from the jobs data alone that we are in the middle of a recession.

-- Jack Krupansky

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