Economists and others weigh in on the decline in nonfarm payrolls and the rise in the unemployment rate.

  • We are on track for the longest and deepest recession of the post-war era and policy will go all out to try to mitigate it. We expect the Fed to cut the target rate again in December (what does it matter? — the funds rate has been at 23 basis points for the entire week as the Fed has embarked on massive quantitative easing) and a stimulus package will likely be passed in the lame duck session of congress (including aid for the states –California to D.C., ‘we are out of money by February’ — extension of unemployment benefits and infrastructure spending). Unfortunately, the claims data continued to deteriorate at the end of October, pointing to another weak jobs report in November. Dear President-Elect Obama, the honeymoon is over and we await your economics transition team with great interest. –RDQ Economics

  • The data does not appear out of line with recessionary norms. While conditions that could drive a worsening are still in place, non-farm payrolls declined by more than 300,000 per month at times during each of the past two historically mild recessions, even more prior to revisions that smoothed the history. Thus far, the rise in unemployment insurance claims also appears consistent with this worsening, but not beyond recessionary expectations… While financial events have been truly remarkable and prolonged weakness in labor markets is likely, employment data look rather unremarkable thus far. –Steven Wieting, Citigroup
  • There was a huge -179,000 net revision to Aug/Sep, so the overall picture is even worse than it seems at first. Payrolls dropped sharply everywhere except government, education and information services. The Boeing strike depressed manufacturing by 27,000 but that is not enough to change the overall picture of a labor market in broad-based meltdown. The unemployment rate jumped to 6.5% from 6.1%, above the expected 6.3%, and is likely to breach the 7% mark early next year… In short, horrible in every way. –Ian Shepherdson, High Frequency Economics
  • The stunningly large 125,000 downward revision included 40,000 fewer state and local government jobs, suggesting the budget cuts forced on those governments have already begun taking a toll. The downward revision also suggest that the BLS methods overstated employment in businesses that may not have filed timely reports. Some of this initial understatement may have been due to business closures and layoffs that occurred in Texas and Louisiana after the hurricanes hit. –David Resler, Nomura Securities
  • The “not at work due to bad weather” series — which we like to use as a proxy for weather-related influences on the employment data — slid all the way to 47,000 in October from 189,000 in September. This means that the payroll outcome in October likely would have been even worse were it not for a hurricane-related rebound in employment in some sectors. –David Greenlaw, Morgan Stanley
  • At present, job losses while very painful are within the scope of the 2001 recession. Job cuts are likely to continue for several more months until companies are more assured on business flow. –Stephen Gallagher, Societe Generale
  • History tells that once the labor market weakens as much as it has in the past several months, job-shedding takes on a life of its own and tends to persist for a long while. We expect the employment data to be dreadful for many months to come and consequently for consumer spending to continue to decline. The U.S. consumer, which for so many years was the global engine of growth, is now the world economy’s achilles heel. –Joshua Shapiro, MFR Inc.
  • The unemployment rate reached 6.5% on a decline in household survey employment that roughly matched the payrolls figures. As we’d expected, the labor force participation rate remained relatively consistent. One of the hallmarks of previous tight labor markets has been an decrease in participation from discouraged workers; this time around, the consumer balance sheet pressures are likely to keep more individuals actively looking for work, regardless of whether that work is plentiful. As a result, we could see a peak in the unemployment rate that exceeds the 7.8% hit in the wake of the 1990 - 1991 recession. –Guy LeBas, Janney Montgomery Scott
  • Much of this collapse in jobs was due to the collateral effects of the credit crunch which is only slowly being repaired. So far this year, 1.18 million jobs have been lost with half of those jobs being lost in the past 3 months as the downward spiral accelerated. The economy is clearly in recession which actually began much earlier this year. –Stephen A. Wood, Insight Economics
  • The surprise isn’t that the bottom has fallen out of the U.S. labor market, the surprise is that this happened in September, at least according to the revisions released with today’s report. September’s job losses, initially pegged at 159,000, were revised to 284,000, while August’s job losses are now also shown to be worse than first reported. Over the past ten months, the U.S. economy has shed 1.179 million jobs, while private sector payrolls have now fallen for 11 consecutive months, with 1.342 million jobs lost over this period. We will note that, as usual, actual job losses are greater than have been reported, due to the impact of the birth-death model employed by the BLS. The model added 71,000 private sector jobs in October, and over the past 11 months has added 872,000 private sector jobs (not seasonally adjusted). –Richard F. Moody, Mission Residential
  • A quick observation of the duration of unemployment indicates that individuals are experiencing a much more difficult time finding jobs that correspond with their skill sets. The number of people unemployed for 15 weeks or longer is up to 40,000 and those experiencing unemployment for 27 weeks or longer increased to 23,600. This data supports the weekly increase in the weekly continuing claims series that implies that individuals in the manufacturing, real estate and financial communities may be on the cusp of experiencing a type of structural unemployment of the kind that has not been seen since the breakdown of the steel and coal industries over three decades ago. –Joseph Brusuelas, Merk Investments

    • Compiled by Phil Izzo