An article titled ‘U.S. economy sheds 216,000 jobs in August’ says just that, and goes on to say the U.S. unemployment rate rose to 9.7% after dipping to 9.4% in July. If this number holds (jobs losses for June/July concurrently were adjusted upward by 49,000) the decline in U.S. job losses from the previous month was the smallest in absolute numbers experienced in 2009.  The U.S. Labor Department also said that since December 1, 2007 the 6.9 million jobs have been lost in the U.S.

This year, the following monthly numbers U.S. Job Losses have been reported, and then in several cases subsequently have been adjusted (usually upward):  January – 614,000, February – 697,000, March – 742,000, April – 539,999, May – 345,000, June – 467,000, July – 276,000, August – 216,000.  By any standard monthly U.S. job losses have been declining in since March, and at the current rate of monthly decline can be interpreted to say that U.S. Job Losses could bottom out by the end of 2009  or early 2010 - even setting aside what I would expect to be temporary job hires in October – December related to the Thanksgiving and Christmas retail season.  That said, in my view continuing U.S. jobs losses are a ‘There is no joy in Mudville’ story for the time being at least.

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ADP just minutes ago released its U.S. job loss estimates for July – coming in at 371,000 further jobs lost last month.  The U.S. Government report on July job losses will be released on Friday morning.  July job losses are estimated to be less than the 473,000 U.S. jobs reported lost in June, but still well above any number that suggests job losses will not continue to be incurred in the next few months.  Certainly it does not appear to me that U.S. job recoveries are likely to be reported any time soon.  It will be interesting to see how the U.S. Stock Markets react to this news - I think they should drop, which likely means they will go up today on the ‘good news’ that U.S. job losses seem to be declining month over month and ’surely there must be a ‘green shoot’ in there somewhere’.

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Click here to read an article titled ‘Black states’ that shows the reported unemployment rate by U.S. State on a convenient map with related commentary by Paul Krugman, the Nobel Prize winning economist.

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An article yesterday titled ‘Prolonged Aid to Unemployed Is Running Out’ says that “over the coming months as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution”.  The article also says that “Because of emergency extensions already enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid” – with “Tens of thousands” of workers already having used up their benefits, those numbers are expected to reach 500,000 by September 30 and 1,500,000 by December 31 according to forecasts by the National Employment Law Project, a private research group.

Until reading this article I had not specifically focused on this problem.  The article further says:

•    unemployment insurance is now a lifeline for nine million Americans, with payments averaging just over $300 per week;

•    while many recipients find new jobs before exhausting their benefits, large numbers in the current recession have been unable to find work for a year or more;

•    calls are rising for Congress to pass yet another extension this fall, possibly adding 13 more weeks of coverage in states with especially high unemployment; and,

•    as of June, the national unemployment rate was 9.5%, and was 15.2% in Michigan.

I consider this pretty scary stuff, and think the implications are important.   What are people going to do if they have no source of funds.  Some of the things that might result are a return to ‘deeper family values’ where family members with ‘more’ subsidize family members with ‘less’, and/or there could be an increase in crime rates where people who otherwise would not commit a crime are forced to turn to crime to survive – as a street-smart taxi driver told me in New York in January “people have to do what they have to do”.  The U.S. socio-economic picture is looking messier and messier to me, and U.S. Politicians are increasingly looking to me like ‘a herd of deer caught in the headlights’.  I find all of this highly worrisome.  I also don’t have any good suggestions or answers to the U.S. dilemma.  I wish I did.  When I read this post to my wife before publishing it she asked me why I didn’t have positive recommendations as to what the U.S. Administration could do to remedy the current U.S. economic circumstance, and return things to what Americans have come to think of as ‘normal’ standards of living.  To that end, in my view a first step would be for the U.S. Administration to balance its annual budget.  For multiple reasons I see little chance of that happening any time soon if ever.

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An article this morning reports on a  Wall Street Journal/NBC poll titled ‘WSJ/NBC Poll: Insecurity Spreads in the Labor Market’ that found although 44% of those Americans think the economy will improve in the next 12 months, only 60% said they were ‘somewhat or very satisfied’ with their job security – down 8% from April and 10% from January.  It seems to me this does not bode well for either near-term increases in retail sales  or U.S. Federal, State and Municipal revenues in 2009.  I think we can look to an even larger U.S. Federal Government Deficit in 2009 than currently is being forecast.

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An article today titled ‘U.S. jobs data a stress test of its own’ provides the first indication I have seen of U.S. job loss estimates for April. April job losses are expected to be reported on Friday. The article says the U.S. Labor Department’s official jobs is expected to show another 630,000 jobs were lost in April – following from +650,000 job losses reported in each of February and March, bringing “total job losses for this recession to a staggering 5.7 million”. The article also reports that economists believe over 2 million additional jobs will disappear in coming months, even if there is a second-half economic rebound in 2009 – meaning that for the broader population, it will still feel like a recession.

I am sure there will be many more reports and discussion on U.S. job losses over the course of the next week and months. Because I consider this statistic of significant importance to the timing of economic recovery I will be following and commenting on those reports on this blog.

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There are multiple articles this morning reporting on Chrysler – more seem to be published ‘by the minute’. A London Times article titled ‘Chrysler set for bankruptcy as talks stall’ reports (as do most others) that Chrysler appears to be headed for Chapter 11 protection from creditors today after talks with lenders broke down last night. The article reports the US Treasury is now believed to be preparing for a brief “surgical” bankruptcy that would avoid liquidation and would pave the way for a deal with Fiat as early as next week. The article further reports President Obama is likely to make an announcement on Chrysler today.

Other articles note that GM has until June 1 to finalize an acceptable (to the U.S. Administration) restructuring plan and, I think importantly, that GM’s restructuring plans include canceling up to 40% of its U.S. dealerships within the next two years. I continue to believe (see earlier posts on this blog) that the U.S. Administration will not allow either Chrysler or GM ultimately to fail. The two companies employ too many people in the U.S., and their respective operations indirectly employ even more U.S. residents in the auto parts supply, component, and ancillary (advertising agencies, printing companies, etc., etc.) businesses for the U.S. Administration to walk away from all those jobs. That said, assuming I am right whatever restructuring occurs will result in more U.S. job losses. if I am wrong, look out ‘a long way below’.

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Following from my post of yesterday on job losses, GM announced this morning it was cutting its global salaried work force by 10,000 (or 13.7%) from 73,000 to 63,000 during 2009.  In the U.S. 3,400 (or 11.5%) of 29,500 white collar jobs will be cut, and most remaining U.S. staff will see pay cuts of between 3 percent and 10 percent. GM also said it would review the pay and benefits its workers outside the United States receive.  Salaried workers in the U.S. who lose their jobs will be eligible for severance pay and some benefit assistance.

Following my post of yesterday there is little to say except again:  Stay Tuned.

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On Friday the U.S. Labor Department reported the U.S. lost almost 600,000 jobs in January and the unemployment rate rose to 7.6 percent, its highest level in more than 16 years.  Both were worse than most forecasts.  Job loss estimates for previous months also were increased by a further 400,000 job losses.  The Labor Department further said that the U.S. has lost 3.6 million jobs since December, 2007 – for more click here.

Canada is reported to have lost 129,000 jobs in January, with the auto industry and other manufacturing sectors scaling back dramatically.  These losses were predominantly full time jobs, and were well beyond any forecasts. Since October, when the Canadian economy took a major turn for the worse, 213,000 jobs representing 1.2% of the work force. The losses were mainly full time – for more click here.

To put these numbers in perspective – you can find charts (updated each month) showing these numbers under the Economic Research tab on the StockResearchPortal.com homepage:

•    accepting the net figure of 3.0 million jobs lost during 2008 (3.6 - 0.6 in January), this number represents at a loss of approximately 2.3% of the total manufacturing  (13.7) and service (116.2) U.S. jobs that existed at the end of 2007.  Losing 600,000 further jobs in January alone represents 22% of all jobs lost in 2008 – which seems to me to be highly significant, certainly if U.S. job losses continue at a rate anywhere close to January levels going forward.

•    at the end of 2007 Canada reported approximately 2.0 million manufacturing jobs and 13.1 million  service jobs, and reported approximately 75,000 manufacturing jobs and no service jobs lost.  Losing 129,000 further jobs in January alone represents 1.7 times all jobs lost in 2008 which has to be highly significant going forward, particularly to the Provinces of Ontario and Quebec.

Note the wide disparity between manufacturing jobs and service jobs in both countries.  Manufacturing jobs are those that produce things that typically have an element of retained value.  Both the U.S. and Canada have become ‘service job dependent’, largely after 2000 with expanded globalization and manufacturing job shifts to low-wage countries.  In my view the statistics set out in this post are highly worrisome and must form part of every investor’s thinking going forward.

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