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From the archives: 2009 economy; A tough year ahead

Gary Huth, labor market analyst and associate economist

Gary Huth, labor market analyst and associate economist at the NY State Dept. of Labor. (undated) Photo Credit: Michael E. Ach

This article was originally published in Newsday on March 1, 2009

When it comes to jobs, even the more optimistic forecasts are depressing.

Most experts expect things to get worse before they get better - for thousands more jobs to be lost on Long Island, in the city and elsewhere in the nation in coming months with little improvement, if any, until later this year - maybe much later this year.

"That's the most optimistic scenario," said Gary Huth, the state Labor Department's principal economist for Long Island.

Employment experts say that doesn't mean job seekers should give up hope, but it does mean they'll have to be smarter and more resourceful. "There are companies that are downsizing but also hiring," said Kate Wendleton, president of the Five O'clock Club, a Manhattan-based career counseling group. For example, she said, a retailer laying off sales people might still have an opening for a purchasing manager.

The numbers are frightening: Long Island had a net loss of 21,600 private-sector jobs in the 12-month period ended in December, the latest month for which the local figures are available, marking the weakest local job market in 16 years, according to the state Labor Department. The net loss represents about 2 percent of the 1.3-million local workforce - significant enough to push the local unemployment rate up from 3.8 percent to 5.8 percent. That's the highest rate in 14 years.

That big loss of jobs compares with a net gain the year before - of 7,100 jobs, with the biggest gains in education and health care, both considered "lagging" indicators, based heavily on government revenues, that tend to weaken as a secondary effect of an economic slowdown.

Large layoffs

In percentage terms, manufacturing has been hit hardest, followed by the financial services sector. Here are other examples:

In December, Arrow Electronics Inc., one of the world's largest distributors of electronic equipment and Long Island's largest company in terms of sales, cut about 1 percent of its 13,200 worldwide jobs. The company has about 750 employees on Long Island.

Audiovox Corp., the Hauppauge-based supplier of consumer electronics systems, reduced its workforce by about 8 percent during 2008. It has 880 employees, including 600 on the Island, but the company won't disclose how many cuts were here.

Financial giant JPMorgan Chase let as many as 7,000 people go last year, of 213,000 worldwide. The company was unable to say how many positions on Long Island were affected.

The subprime mortgage meltdown costs about 1,300 their jobs at Melville-based American Home Mortgage.

The slowdown in home purchases affected another component of the financial sector - real estate sales. Joseph Mottola, chief executive of the Long Island Board of Realtors, says about 5 percent of member Realtors left the business in the past year - leaving about 23,000 people still selling homes. He says about 6 percent of the Island's real estate offices closed in the same period of time, leaving about 2,500.

Pearl Kamer, economist for the Long Island Association, a business group, says the December figures suggest her previous forecast that 20,000 to 35,000 jobs would disappear this year in Nassau and Suffolk was too conservative. "If we see another few months like December, I'll probably have to revise it - upward 50,000," she said.

That wouldn't be quite as bad as the 1990 to 1992 recession, when Long Island was more heavily dependent than now on manufacturing jobs and lost 86,000 jobs. But Kamer warns: "This will be a significant hit to Long Island in terms of loss of jobs. I don't want to sugarcoat it."

The U.S. Department of Labor said in a January report that, since the official start of the recession in December 2007, the number of unemployed workers nationally grew by 3.6 million, and the unemployment rate has risen by 2.3 percentage points. In February, the department said 598,000 more jobs were lost nationally in January raising the national unemployment rate to 7.6 percent.

New York City's unemployment rate was 7.2 percent in December. And when Mayor Michael Bloomberg released his proposed budget for the 2010 fiscal year that begins July 1, he said the city might have to eliminate more than 20,000 jobs of about 300,000 through attrition and layoffs to help close a projected $4-billion deficit.

2009 forecast

The Federal Reserve on Feb. 18 lowered its forecasts for the economy this year, predicting that it will shrink further and that the unemployment rate will rise to between 8.5 and 8.8 percent. It previously forecast the jobless rate no higher than 7.6 percent.

One wild card in any forecast is the impact of President Barack Obama's $790-billion economic stimulus package, which he says will create or save 4 million jobs and put more money in consumers' pockets. The Obama Administration has estimated that its plan also would create or at least save 228,000 jobs in New York State.

Another potential kick-start for the economy is the Obama administration's foreclosure-prevention program, which Realtor group executive Mottola says should reduce the numbers of homes coming onto an already glutted market. He says there are signs already of some recovery in the spring. "We're seeing it anecdotally," he said. "Brokers are telling me there's more activity in their offices compared to the last quarter of 2008."

At least, said state economist Huth, the administration's recession-fighting measures should halt the decline in jobs.

But Kamer thinks it will do little to stimulate consumer spending in the near term and, by extension, the economy as a whole - because most elements of it, including individual tax credits and job-creating infrastructure improvements, will be too little and/or too late. "It will have a positive psychological effect," she said, "but if people don't have the money in their pockets, they won't spend it."

Things are happening so fast that some of the information available for job seekers is outdated. For example, a U.S. Department of Labor-sponsored Web site that offers career resources and information to job seekers lists retail sales as one of the "occupations with the most openings" - this despite the dismal holiday shopping season just past and announcements of job cuts since then by Macy's, Target and The Home Depot, among others and bankruptcy filings by Fortunoff, Steve & Barry's and Linens 'n Things.

Kamer said the Island lost 4,000 retailing jobs in the year ended at the end of December.

THE JOB MARKET

5.8% The local unemployment rate, the highest in 14 years

UNEMPLOYMENT RATE

U.S.

End of 2007 4.9%

End of 2008 7.2%

LI

End of 2007 3.8%

End of 2008 5.8%

U.S. net job losses or gains*

2007 +109,000

2008 -2.6M

*private sector

Jobs on the line: For each month in the graphs below, bar shows the jobs gained

NATIONWIDE

Jan. 08 -72,000

Feb. -144,000

March -122,000

April -160,000

May -137,000

June -161,000

July -128,000

August -175,000

Sept. -321,000

Oct. -380,000

Nov. -597,000

Dec. -577,000

Jan. 09 -598,000

LONG ISLAND

Jan. 08 12,800

Feb. 12,200

March 8,400

April -1,000

May 3,300

June 1,600

July 3,300

August 4,600

Sept. 800

Oct. -2,600

Nov. -8,900

Dec. -21,600

Jan. 09 Not available

Feb. Not available

NEW YORK CITY

Jan. 08 50,000

Feb 41,900

March 40,800

April 37,100

May 29,100

June 19,400

July 24,200

August 29,200

Sept. 20,000

Oct. 5,200

Nov. -23,800

Dec. -49,100

Jan. 09 Not available

Feb. Not available

SOURCE: U.S. Bureau of Labor Statistics; New York State Department of Labor

 

 

 

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