Record rise in the number of monthly unemployed

Feb. 6, 2009

Canadian and American unemployment grew by record amounts this past month according to data released by the US Bureau of labour statistics and Statistics Canada. In Canada the number of jobs lost was of the order of 129,000 the largest such number in the past thirty years. Jobs lost in the US was of the order of 598,000 a   disasterous statistic. The unemployment rate rose in both countries with the Canadian rate leaping 0.6 % points to 7.2 %. The US rate rose to 7.6 % from 7.2 %.Since December 2007 the US has experienced a loss of 3.5 million jobs with half of them lost in the past three months.This is a very clear and stark fact and alongside the rise in Canadian unemployment   it suggests a much more severe downturn than many mainstream economists who advise the Government in Ottawa had believed to be the case. It is also what I have been forecasting as the eventual outcome of overly restrictive monetary policy that was inflation obsessed and ignored the risks of excessive unemployment.

Some blame the bubble on Greenspan's low interest rates.But it was actually the outcome of excessive deregulation, the inadequate supply of safe government treasury paper used to finance debt and traditional business cycle mania that is a regular historical occurrence.These factors combined with reckless practices in the financial community led to the current mess. It is time that the Ottawa Department of Finance and Bank of Canada economists went back and studied more of Keynes as opposed to the new classical macroeconomics on which they were almost all largely schooled.

Unemployment rose in Ontario to 8.0% and to 7.8 % in Québec with employment in manufacturing being particularly hard hit. The largest number of jobs lost was in Ontario 71,000; B.C. 35,000; and Québec 26,000.In neither of the two recessions in the 1980s and early 1990s were month to month job losses as great as this.

The ILO has released data that shows that there are over 220 million people world wide who are unemployed and that the global rate of unemployment is 7 %. In Europe Spain is suffering the most with 14.4 % unemployment followed by Ireland with 8.1 %,   France with 8.1 %;   Greece 7.5 %; Germany 7.2 %; Sweden 6.9%; Italy 6.7 %; UK 6. %. The US has 7.6 %, Canada 7.2% and Japan 4.5 % unemployment.The German GDP suffered its worst quarter to quarter decline since keeping track of the data began. The GDP fell 2.1 % in the final quarter of 2008.In Japan the GDP has fallen by a record 3.3 % in the final quarter of 2008.this is an annual rate of decline of over 12 %.
It is essential in the US that President Obama's stimulus be passed as quickly as possible and that here in Canada the opposition seek to increase the stimulus passed in the budget through new legislation, if necessary. Otherwise we face very difficult times ahead.