- The Washington Times - Saturday, September 19, 2009

Forty-two states and the District of Columbia lost jobs last month, confirming that the nation’s labor market continues to deteriorate even as more “green shoots” are sighted in other areas of the economy.

Fourteen states and the District suffered double-digit jobless rates in August as the unemployment rate increased in 27 states and the nation’s capital, the Labor Department reported Friday.

As a result, states whose budgets have been battered by soaring unemployment, rising social spending and collapsing tax revenues took another big hit in August even as the nation appeared to be climbing out of recession.

The unemployment rates in two big census regions topped 11 percent in August.

Led by a 12.2 jobless rate in both California and Oregon, the Pacific region - which also includes Washington, Alaska and Hawaii - registered an overall unemployment rate of 11.6 percent last month.

The August unemployment rate in the East North Central region (Illinois, Michigan, Indiana, Ohio and Wisconsin) was 11.1 percent, a decline from the 11.4 percent rate that prevailed the two previous months.

The nation’s highest unemployment rate, 15.2 percent, belonged to Michigan, where the recession’s impact on the auto industry has been the most severe. Nevada, whose Las Vegas region has been hammered by plunging home values and rocketing foreclosure rates, registered a 13.2 jobless rate last month. Close behind was Rhode Island at 12.8 percent, followed by California and Oregon at 12.2 percent.

The national unemployment rate jumped from 9.4 percent in July to 9.7 percent in August, a 26-year high. Texas lost 62,200 jobs last month; 42,900 were eliminated in Michigan; and Georgia payrolls shrank by 35,000.

“Nationwide, the recession’s grip is loosening amid signs more factories are ramping up production and businesses are laying off fewer workers,” said Alexander Miron of Moody’s Economy.com. “Despite the broad-based drop in employment, job losses in most regions remain moderate compared with the rapid rate of decline reported earlier this year.”

Altogether, payrolls shrank by 216,000 in August, the smallest drop in 12 months. Monthly job losses, which averaged nearly 650,00 from November through April, declined toan average of 315,000 during the past four months, including just 276,000 in July.

Since the current recession began in December 2007, the economy has shed 6.9 million jobs, the most since the Great Depression. California alone has lost nearly 1 million jobs during the recession, and the number of workers in Michigan has been slashed by 9.9 percent, according to Labor Department data.

To meet the employment demands of an expanding labor force, economists estimate that roughly 150,000 jobs need to be added each month just to keep the unemployment rate from rising.

However, most economists project that the unemployment rate will soon top 10 percent and remain elevated throughout 2010. The Federal Reserve’s latest forecast, for example, has the jobless rate averaging between 9.5 percent and 9.8 percent during the fourth quarter of next year.

Fed Chairman Ben S. Bernanke said Tuesday at the Brookings Institution that the U.S. recession “is very likely over.” Earlier that day, the Commerce Department reported that retail sales increased 2.7 percent in August, the best rate in more than three years. Even sales unrelated to the “cash-for-clunkers” program jumped last month.

But the recovery, Mr. Bernanke warned, is not expected to be robust. “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” the Fed chairman said.

So-called “jobless recoveries” followed the last two recessions, in 1990-91 and 2001.

Although the 1990-91 recession ended in March 1991, the unemployment rate continued to rise over the next 15 months, peaking at 7.8 percent in June 1992 and dooming President George H.W. Bush’s chances for re-election.

The 2001 recession ended in November of that year, but the unemployment rate peaked 19 months later at 6.3 percent in June 2003. Payrolls did not begin expanding until September of that year, and employment did not return to its pre-recession level until February 2005, nearly four years after the 2001 recession began and 39 months after it ended.

The outlook for states, which cannot run budget deficits, will be especially bleak if the recent trend in post-recession employment repeats itself.

Noting that employment and state revenue “typically continue to decline 18 months after a recession ends,” Mississippi Republican Gov. Haley Barbour told The Washington Times Thursday that states had already pared their budgets to the bone and have nowhere else to cut.

“We’re going to continue to have a harder time,” Mr. Barbour warned. “It may be 2015 before revenue’s back to where it was in 2008.”

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