http://seekingalpha.com/article/98562-batten-down-the-hatches-economic-forecast Ray Hendon
Nothing could make me happier than to put the financial crisis behind us. The legislation passed Friday by our elected representatives was a relief. As a nation, we had, in my view, reached a point where we needed to see that our elected leaders could come together and act in unison. In this case, appearance of action was probably as important as the action itself.
As far as we've come, though, we have further to go; the crisis is not behind us. At this early stage of discovering the nature of the problem, the consequences of the rescue plan are not well understood. We don't know how well the plan will work. My best hope is that it may be the beginning of the end of the crisis.
But the beginning of the end of the financial crisis marks the end of the beginning of an economic downturn that now looks to be much deeper and longer lasting than we had anticipated just a few weeks ago. The Department of Labor's jobs and payroll report for September has put an end to “Will there be a recession?” talk. After reporting that U.S. payrolls plunged by 159,000 jobs last month--the worst loss in five years-- the question is no longer “if,” but “how bad will it be?”
The graphic below paints a grim picture of the last twelve months:
The trend is unmistakable and the indicators pointing forward are even worse. Every month since last October has seen fewer jobs for Americans than the previous one, and it appears that the losses are accelerating. The Labor Department reports that over the last nine consecutive months, the economy has seen 760,000 jobs eliminated. The report does not even cover the most recent events that led to the $700 billion rescue package passed on Friday. In other words, the employment picture painted above does not reflect the effects of the credit contraction that has seized up the credit market in the last week or so.
The bad employment news was spread over almost all sectors of the economy: manufacturing jobs fell by 51,000 in September (-442,000 YTD); retailer and the construction industry each lost 35,000 jobs; transportation and warehousing fell by 16,000. Financial services lost 17,000, down 172,000 jobs from their December 2006 peak.
What few bright spots there are, are decidedly dim: mining added 8,000 jobs for the month, and government payrolls expanded by 9,000. Healthcare added about 17,000. Neither is there solace in rising wages. Average weekly wages for 80% of the American workforce have risen 2.8% over the last twelve months, which is a 2% to 3% loss to inflation.
FULL story at link.