States keep losing jobs

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By David M. Dickson

Forty-four states lost jobs in April, the Labor Department reported Friday, as the most severe financial and economic crises since the Great Depression continued to ripple throughout the nation.

The consensus among economists is that the unemployment situation will get much worse before it begins to get better, even after the economy starts to rebound.

Several states in the Midwest (Michigan, Ohio and Indiana) and the West (Oregon, California and Nevada) joined Florida, the Carolinas and the District of Columbia in posting jobless rates of 9.5 percent or higher for April.

The national jobless rate was 8.9 percent last month, and most economists expect it will approach or exceed 10 percent before beginning to decline. The U.S. economy has not endured double-digit unemployment in more than 25 years.

"The unemployment picture remains ugly," said Alexander Miron of Moody's Economy.com, and "the outlook for employment remains bleak."

Employment fell fastest during April in the census region that includes Michigan, Indiana and Ohio. Michigan's unemployment rate of 12.9 percent, up from 12.6 percent, is the nation's highest. Ohio's jobless rate jumped over the double-digit bar for the first time during the recession, hitting 10.2 percent. Indiana's is at 9.9 percent.

Altogether, Michigan, Ohio, Illinois, Indiana and Wisconsin, the heart of the Midwest's auto industry, lost 120,000 jobs in April. And the worst is yet to come, analysts said.

"Moody's Economy.com expects the Midwest to limp through the next several months as the auto industry unwinds further, pushing the unemployment rate higher," Mr. Miron said.

California's unemployment rate dipped slightly to 11 percent, but a separate payroll survey revealed that the state shed 63,700 jobs in April. The state's fiscal crisis, which became red-hot this week after voters overwhelmingly rejected five budget measures at the polls, will not help the state's employment situation.

The national unemployment rate averaged 4.6 percent during 2006 and 2007. After the recession began in December 2007, the jobless rate averaged 5.8 percent last year.

Since December 2007, the economy has lost 5.7 million jobs. Wachovia Economics Group forecasts that the unemployment rate will average 9.3 percent this year and 10.5 percent next year.

"We do not see a consumer/housing-led 'V-shaped' recovery as some suggest," Wachovia said in its May forecast. "Instead we are sticking to a more sluggish recovery with higher structural unemployment that will disappoint."

For the first 40 years after World War II, "V-shaped" recoveries were traditional. Payroll employment tended to increase quickly after the recession ended. Following the deep recessions of 1973-75 and 1981-82, both of which lasted 16 months, employment began increasing during the second month after the economy hit bottom.

After the 1990-91 and 2001 recessions, however, employment was very slow to recover. Employment reached its cyclical low point in August 2003, which was 21 months after the 2001 recession ended. And while the 1990-91 recession ended in March 1991, when the unemployment rate was 6.8 percent, the jobless rate continued to rise until it peaked at 7.8 percent 15 months later in June 1992 - just in time to doom President George H.W. Bush's re-election chances.

If the labor market follows the trends of the past two recoveries and if economic growth resumes at some point in the second half of this year, as many economists expect, then employment could still be falling and the jobless rate could still be rising throughout the congressional elections of 2010.