- The Washington Times - Saturday, April 4, 2009

The nation’s unemployment rate surged to a 26-year high of 8.5 percent last month as employers axed another 663,000 jobs, offering no sign that the free fall in the job market is over.

The string of massive job losses reported by the Labor Department on Friday, totaling more than a half-million a month since November, is the worst in U.S. history. Since the start of the recession in December 2007, employers have slashed 5.1 million jobs - two-thirds of them since the credit crisis struck in October.

January, with a gargantuan loss of 741,000 jobs, was the single-worst month since 1949, the department said. Jobs have been lost in virtually every sector of the economy, led by a hemorrhaging of work in construction and manufacturing, both of which have lost more than a million jobs in the recession. Even state and local governments - formerly a refuge for job seekers - laid off 12,000 employees last month.

“When will this calamity end?” asked Harm Bandholz, economist at Unicredit Markets, who like most economists and workers has been stunned by the huge, unrelenting job losses each month. While the free fall in other parts of the economy during the winter appears to have slowed in recent weeks, no signs of easing have appeared in the job market.

Many economists note that improvement in the job market may lag significantly behind improvement in other areas of the economy, such as orders at factories and sales at retail stores, which have shown signs of stabilizing recently.

The best hope for workers is that the economy will follow the pattern more typical in U.S. recessions, Mr. Bandholz said, with employment bottoming soon after other areas of the economy start to improve.

“The job market has fallen off the cliff over the past five months and the massive hemorrhage in the job market will continue” until businesses have brought production in line with the seriously depleted demand around the world, said Sung Won Sohn, economics professor at California State University Channel Islands.

While he held out hope that the economy may be close to hitting a bottom, he said the creation of new jobs to replace the millions that have been lost is still far off. And the return of jobs is likely to be sluggish and halting compared with the relentless drumbeat of job losses seen recently, he said.

“Before they even think about hiring, employers want to make sure that a sustained economic recovery is here,” he said. “The jobless rate, a lagging indicator, will keep marching upward throughout the year and well into 2010, exceeding 10 percent.”

Federal Reserve Chairman Ben S. Bernanke urged courage and confidence in the face of adversity in a speech to bankers in North Carolina.

“These are extraordinarily challenging times for our financial system and our economy,” he said, offering hope that the Fed’s and Treasury’s efforts to revive banking and credit will produce a pickup in the economy by year’s end.

“I am confident that we can meet these challenges, not least because I have great confidence in the underlying strengths of the American economy.”

Last month, state and local governments for the first time joined the list of employers slashing jobs. While the 12,000 slump in government jobs was small in comparison with 161,000 manufacturing layoffs, it was a dark development as the government had been a last refuge for job seekers. A massive $787 billion stimulus bill passed in February was aimed in part at maintaining government jobs in such areas as education and law enforcement.

In March, the only sectors in the U.S. economy that continued to produce jobs were the federal government, where jobs rose by 7,000, and health care, where employment rose by 15,000 - half the rate seen last year.

“This morning´s employment report offered no hint of light at the end of the tunnel,” said economist Heidi Shierholz with the Employment Policy Institute. “Instead, it showed that the labor market is still in its darkest months.”

Ms. Shierholz and other economists said the effects of the stimulus bill will likely appear later this year.

“While the February stimulus package will very likely achieve its original goal of creating or preserving between 3 [million] and 4 million jobs, the labor market is already 7 million jobs below where it needs to be,” she said.

The jump in the unemployment rate to 8.5 percent from 8.1 percent in February was led by a surge in joblessness among adult men and whites. Unemployment remains highest among teenagers, with more than one in five unable to find jobs, and among minorities, where it has surged into the double digits.

Economists say the true unemployment rate is probably higher, closer to 16.7 percent, if discouraged workers are counted along with those who took part-time jobs because they couldn’t find full-time work.

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