Nearly 600,000 jobs lost in January.  On Friday, the Bureau of Labor Statistics (BLS) reported that employers cut 598,000 jobs during the first month of 2009, marking the 13th straight month of job losses and bringing the total number of jobs lost since December 2007 to 3.6 million. (See Chart)  The BLS employment report underscored that payrolls declined across all sectors of the economy, with January losses in the services sector (279,000) nearly matching those in the goods-producing sector (319,000).  With real estate prices continuing to falter, there have been dramatic cuts in residential building (61,000) and now also nonresidential building (26,500).  The professional and business services sector, which comprises 1 out of every 5 private service jobs, reduced payrolls by 121,000 in January, reflecting a sharp drop in the demand for professional, administrative support, and temporary help personnel.  Lastly, the manufacturing industry has experienced considerable payroll losses (207,000), led principally by the decline of the automotive sector, which has seen nearly a quarter of a million jobs (25 percent of the industry in 2007) eliminated during 17 straight months of losses.

High unemployment taking toll on state programs.  With news that the unemployment rate jumped 0.4 points to 7.6 percent in January, state governments have found their unemployment insurance trust funds depleted amid a record number of ongoing jobless claims.  According to the recent BLS report, the median duration for unemployment spells has risen to 10.3 weeks and 22.4 percent of the unemployed have been unable to find a job for 27 weeks or more, typically the maximum amount of time that filers are eligible for regular unemployment benefits.  A recent report from the National Conference of State Legislatures reveals that 7 states have already exhausted their unemployment insurance trust fund and another 11 states may see their funds exhausted by the end of 2009.  Worse still, these official unemployment measures underestimate the rate of underemployment, most of whom are ineligible for unemployment benefits.  Including involuntarily part-time workers and marginally attached workers (those who want a job but are not actively searching), the unemployment rate would climb to 13.9 percent, the highest reading since the BLS began tracking the statistic in 1994.

Consumer spending falls half a percent.  Reaffirming what surveys and other reports have shown, the Bureau of Economic Analysis announced that consumer spending in December fell 0.5 percent even after adjusting for declining price levels.  What was at first seen as consumers cutting back on larger purchases of durable goods (e.g. large electronics and automobiles) has become a broader reduction (or slowing) in spending on services and nondurable goods as well.  Spending has trended downward for over a year and is now 1.7 percent below last year’s pace.  Private surveys of same-store retail sales during the month of January have shown declines of over 2 percent from the year before.  Given these preliminary data, the official retail sales report from the Census Bureau is likely to show that consumer demand weakened further still last month.