"Pink slips continue to fly," said Meny Grauman, an economist for CIBC World Markets.
With output still falling at a dizzying rate, most companies are shedding unneeded workers and cutting back the hours of those remaining. Strapped by debt and seeing their paper wealth evaporating, many consumers are spending as little as they can.
"The economic patient is still in critical condition, with little medication to relieve the pain," wrote economists Brian Bethune and Nigel Gault of IHS Global Insight. "We will have to bite the bullet."
The first week of the new month brings two of the most important economic indicators: the ISM index and the non-farm payrolls report. Both are expected to be very grim news.
Little joy in manufacturing data:
First, on Monday, the Institute for Supply Management reports back from purchasing managers at manufacturing firms across the nation.
Although few people outside of the financial markets or the economics profession know what it is, the ISM is probably the best single leading indicator marking the end of a recession. The ISM is a diffusion index that measures the breadth of economic distress or success across firms. It asks key executives to judge whether business is getting better or worse.
Once the ISM -- and especially the new-orders component -- turns up decisively, the expansion is typically one to four months away, although in some cases it has turned up as much as a year before the end of a recession.
The ISM plunged to 32.9% in December -- a level only seen at the depths of the very worst recessions -- but it bounced back to 35.6% in January, giving some hope that we'd seen the bottom.
Unfortunately, the ISM is expected to dip back to 34% in February, according to the median forecast of economists surveyed by MarketWatch, as global export markets worsened and U.S. capital spending remained weak.
The key components to watch will be new orders, export orders and inventories. Manufacturers' own inventories are too high, and they judge that their customers' inventories are too high as well. Once customer inventories are worked down, factories can get back to work.
Horrendous payroll numbers:
If the ISM is forecast to be awful, the non-farm payrolls report is expected to be horrendous. The Labor Department is slated to report the figures Friday.
Economists expect payrolls to plunge 630,000 in February, slightly more then the 598,000 lost in January and the 597,000 lost in November. The unemployment rate is expected to climb to 7.9% from 7.6%, breaking through the 7.8% peak in the 1991 recession to the highest level since 1984.
It would mean that a record 4.2 million jobs will have been lost since the recession began in December 2007, with no end in sight.
"Employment losses have deepened considerably in recent months," wrote economists for Wachovia, who expect total losses for the recession to top 6.5 million.
"With total revenue declining at its worst pace since the late 1950s, many businesses and governments are in survival mode and have no choice but to cut jobs," Wachovia economists said.
The main evidence for a worsening job market has been the rise in unemployment benefits. First-time claims have risen decisively over 600,000, nearly double the level at the beginning of the recession. Continuing claims are at an all-time high. Consumer surveys also show extreme pessimism about finding a job.
While some forecasters think job losses in February stayed in the ballpark of about 590,000, a few economists think the labor market got much worse in February and are expecting losses of 650,000, 700,000, or in one case, even 800,000.
The report is "likely to be the weakest to date," wrote economists for Barclays Capital, who expect payroll losses of 675,000 and an unemployment rate of 8%.
"February was the worst month yet," said Global Insight's Bethune and Gault, who are predicting payroll losses of 750,000 and an employment rate of 8%.
Others have a slightly less dire view, if a loss of 625,000 could be considered upbeat. "Our sense, admittedly based mostly on anecdotes, is that labor market conditions remain dismal but are not necessarily accelerating to the downside," wrote Stephen Stanley, chief economist for RBS Greenwich Capital.
Economists expect the number of hours worked to continue plunging as more workers are forced into part-time shifts. In January, 7.8 million workers wanted to work full time but could only get part-time work.
Average weekly earnings likely rose 0.3% again, as the lowest-paid occupations took a larger share of job losses.
Worst since '49? Or since '45?
If the economy did shed 630,000 jobs in February as expected, it would be the third largest monthly loss on record, dating back to 1939.
The record was set in September 1945, when nearly 2 million people lost their jobs after the Allies won the most destructive war in history and industry was retooling for peacetime, sending "Rosie the Riveter" back to her knitting.
In October 1949, 834,000 jobs were lost when almost all the nation's steelworkers went on strike in the final month of a brutal but short recession.
Another strike in July 1956 cost 629,000 jobs, but the next month saw 678,000 jobs regained.
Of course, the size of the workforce is much larger today than it was in 1949 or 1956. But as a proportion of the workforce, this recession also is moving up in the record books.
If 630,000 jobs were lost in February, it would bring total losses in this recession to just over 3% of payrolls, close to the 3.1% lost in the recessions of 1982, 1954 and 1949 (excluding the strike). Next on the list: 4% in 1958 and 6.9% in 1945.
If Wachovia economists are right that 6.5 million will lose their jobs by the end, employment will have fallen by 4.7% in this recession.
And remember: These forecasts assume the Federal Reserve will slowly be able to get credit flowing again, and that the recently approved fiscal stimulus will give a significant boost to the economy.
LET THE REVOLUTION BEGIN!
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Live your values. Love your country.
And, remember: TOGETHER, We can make a DIFFERENCE!
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