Check out the graph above via Catherine Rampell at The New York Times Economix (blog). It compares job losses in the current downturn to five previous recessions going back to the mid-1970s. The patten of job loss is far, far deeper than in any previous period and has extended for more than two years. By the looks of the chart, it appears that deep job losses may have ended and the pattern may be ticking up. Let’s hope so.
The economic crisis continues to reshape our economic geography.
Despite short-term hits, the world’s leading financial centers, New York and London, are likely to remain on top through the crisis and beyond, according to Peking University professor Michael Pettis, writing in Newsweek:
Financial crises tend to trigger overwrought predictions of major economic shifts–and then debunk them. Today’s global economic meltdown is no different. In recent months, it has become popular to predict that New York and London (or NyLon, as they’re together known) will soon lose market share as cities in the emerging world use the crisis to wrest away dominance. But history suggests that the opposite is more likely: that New York and London will actually increase in importance over the decade to come …
Big centers have two huge advantages over smaller rivals: greater liquidity and larger networks. Big investors tend to flock to big financial capitals because they offer higher volume and lower trading costs, and issuers of stocks, bonds and other financial products follow the flock of investors. …When a liquidity boom ends, however, it tends to accentuate the advantages of big markets while diminishing those of smaller ones.
China Digital Times picks up China Law Blog’s similar reading about:
why New York will remain as the world’s financial capital and why, despite the projected growth of Asia’s economies, we should not expect Shanghai, Hong Kong, or anywhere else to usurp it. At least not for an exceedingly long time.
Older Rustbelt centers continue to get clobbered by the structural decline of manufacturing. Job losses at bankrupt automakers GM and Chrysler have been highly concentrated in older Rustbelt centers as this NYT map shows.
And, the sun continues to set on shallow-rooted Sunbelt cities, according to this Associated Press analysis.
Some cities — Las Vegas, Phoenix, Fort Myers are good examples — hitched their floats to housing bubbles and got caught up in development that depended largely on, well, development itself, rather than sustainable, scalable, productive industry, economic analysts say. …
AP Stress Index figures, which calculate the economic impact of the recession on a scale of 1 to 100, illustrate how the downturn has played out in some of these communities:
In Maricopa County, home to Phoenix, the Stress Index more than doubled from 5.12 at the beginning of the recession in December 2007 to 12.67 in March 2009, worsened by a foreclosure rate that nearly tripled.
Mounting foreclosures in Las Vegas’ Clark County drove up its Stress Index score from 10.5 at the start of the recession to 19.3 in March 2009.
In Lee County, home to Fort Myers, unemployment has doubled and foreclosures have soared 75 percent since the recession began, lifting its Stress Index from 10.5 to 19.98 …
Now Phoenix’s hotel industry is tanking, according to the Wall Street Journal.
“Phoenix suffers from the dual challenges of overbuilding and shrinking demand due to the national drop-off in corporate conferences,” said David Loeb, a hotel-industry analyst with Robert W. Baird & Co. “All of this means that Phoenix’s hotel market has experienced one of the steepest downturns among the big markets.”
The U.S. lost 563,000 jobs in April, down 100,000 or so from the 663,000 jobs lost in March. But the unemployment rate continued to rise, increasing from 8.5 percent in March to 8.9 percent last month. according to the Bureau of Labor Statistics (BLS). This brings total job loss to 5.7 million since the onset of the recession in December 2007. (Yesterday, the Wall Street Journal reported reported that unemployment was “less bad” in April as private companies cut 491,000 jobs, compared to 708,000 in March, according to data from payroll processor Automatic Data Processing and forecasting firm Macroeconomic Advisers.)
But the real unemployment rate is as high as 15.8 percent according to the BLS U6 measure which includes marginally attached and discouraged workers.
The impact of the recession continues to be extremely uneven by gender, race, class, and occupation.
Race: The unemployment rate for whites was eight percent compared to 11.3 percent for Hispanics, 15 percent for blacks, and 17.2 percent for black men.
Gender: Men continue to experience higher rates of unemployment than women – 10 percent vs. 7.6 percent (for those over 16 years of age) – due to the concentration of men in manufacturing jobs. BusinessWeek’s Michael Mandel notes that the unemployment rate among men is now “at or near the post-war high,” causing him to worry that, “The difference in the pain being absorbed by men and women is astonishing, and may have long-term social and political implications.”
Education/ Human Capital: Unemployment is even more uneven by education or human capital level. The unemployment rate for college graduates is 4.4 percent, half that for high school (only) graduates (9.3 percent), and one-third of the 14.8 percent rate facing those without a high school diploma.
Class and Occupation: And there remain huge differences in unemployment by class or occupation (PDF). The highest rates of unemployment remain concentrated in working class occupations – production workers (14.7 percent), movers and transportation workers (12.5 percent), and construction and extraction jobs (19.7 percent). For service class workers the unemployment rate is 8.7 percent. Unemployment is significantly lower for the creative class. For management and business occupations – including hard-fit financial jobs – the unemployment rate is 4.4 percent; and for professional and technical occupations, it remains less than four percent (3.6 percent).
Image from Justin Fox. It’s bad already. My guess is it will overshoot ‘81 by a considerable margin, especially taking into account Carmen Reinhart and Ken Rogoff’s research which finds that unemployment rises, on average, by seven percentage points over four years in the wake of serious financial crises.
Your thoughts?
