U.S. Officially Hits the Skids
By Ryan Healy | March 9, 2008
A month ago, I wrote an article entitled “What to Do Before You’re Fired.” I wrote the article partly because of the January jobs report, which showed 17,000 job losses.
Well, if January was bad, February is far worse.
A New York Times business article (“Sharp Drop in Jobs Adds to Grim Economic Picture”) reports 63,000 job losses in February, a 270% increase over January’s numbers. Apparently, the irrationally optimistic are finally changing their tune…
Though monthly payroll data are notoriously volatile and subject to revision, the jobs report was so bleak that many of the few remaining optimists on Wall Street threw in the towel and conceded that the United States was already in a recession.
Furthermore, as the article points out, an acceleration in job losses usually confirms a recession is already under way.
Paul Ashworth, an economist at Capital Economics, noted that private-sector payroll employment has now declined by an average of 47,000 a month — a decline that has been followed by a recession every time it has happened in the last 50 years. In each of those recessions, Mr. Ashworth added, the job market recovered only after monthly job losses peaked at 200,000 jobs.
If history proves a reliable predictor of the future (and often it is not), then monthly job losses will more than triple from February’s levels before a recovery takes hold. And given the unique nature of this particular recession (housing bubbles, debt bubbles, etc), job losses may be far higher than normal.
So what does all this mean?
A couple things:
1. You need to manage your money well.
For many people, paying off debt and establishing some kind of emergency fund should be a top priority.
For others, the art of frugality and learning to live on less may be a higher priority.
2. You need to prepare for the worst.
In addition to debt reduction and saving money, you need to prepare for the possibility of losing your job. This might mean brushing up on some of your business skills and/or developing a part-time source of income on the side.
How do you interpret the latest job data? What suggestions do you have?
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Topics: Debt Reduction, Economics |
March 10th, 2008 at 6:28 am
I agree, prepare for the worst, and hope that this is one of those times history doesn’t prove a reliable benchmark for how things will unfold.
Figuring out ways to start making extra money (or maximize how much money you are currently making, coupled with frugality, right now, is sound advice.
Sure you end up working a little more. But if all goes downhill then you’ll be grateful just have a roof over your head. And if it doesn’t, and you’ve been saving, then you can take a nice long vacation.
March 10th, 2008 at 7:53 am
Hey John - Thanks for dropping by.
I’ve been noticing a decline in response for some of my copy clients. I think it speaks to the changing economic conditions in which we find ourselves.
Whenever the housing market experiences a “correction,” all the wannabe realtors vanish (a.k.a. go out of business). I think we may see the same thing with copywriters the next couple years…