Employers are laying off workers at a faster pace despite a few hopeful signs recently that the recession – now the longest since World War II – could be easing.
The Labor Department on Friday is slated to release a report expected to show that a net total of 654,000 jobs were lost last month. That’s more than the population of Baltimore.
If economists are right, it would mark a record four straight months that job losses topped 600,000.
„It’s going to be another month of gargantuan jobs losses,” predicted Stuart Hoffman, chief economist at PNC Financial Services Group. „Companies were slashing jobs and not filling vacant positions.”
With employers axing payrolls, the nation’s unemployment rate is expected to jump to 8.5 percent, from 8.1 percent in February. If that happens, it would mark the highest jobless rate since late 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.
As the recession, which started in December 2007, eats into their sales and profits, companies are laying off workers and resorting to other cost-saving measures. Those include holding down hours, and freezing or cutting pay, to survive the storm.
Looking forward, economists expect monthly job losses continuing for most – if not all of – this year.
However, they are hoping that payroll reductions in the current quarter won’t be as deep as the roughly 650,000 average monthly job losses in the January-March period. In the best-case scenario, employment losses in the present quarter would be about half that pace, some economists said. That scenario partly assumes the economy won’t be shrinking nearly as much in the present quarter.
Federal Reserve Chairman Ben Bernanke said the recession could end later this year, setting the stage for a recovery next year, if the government is successful in bolstering the banking system. Banks have been clobbered by the worst housing, credit and financial crises to hit the country since the 1930s.
Even if the recession ends this year, the economy will remain frail, analysts said. Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and any recovery has staying power.
Given that, many economists predict the unemployment rate will hit 10 percent at the end of this year. The Fed says unemployment will remain elevated into 2011.
finance.yahoo.com