Labor report on tap

Of all the economic reports that wind up in the newspapers, the labor report is one of the most anticipated because of its impact on Federal Reserve policy and politics at the national level. The ease or difficulty in finding employment has a large impact on consumer confidence, and in turn, politicians keep a close eye on the figures.

This recession is turning into one of the worst economic slumps since the 1930s, impacting nearly all segments of the economy. As a result, companies have slashed payrolls to protect profits, and in some cases, to avert bankruptcy.

As can be seen by the chart provided by the Bureau of Labor Statistics, payrolls are down just over 5 million since the recession began over a year ago. But the real damage to the job market did not occur until after the credit markets froze in late September following the failure of Lehman Brothers.

Credit is the lifeblood of the economy. The commercial paper market and lines of credit provide businesses with financing to expand inventories and factories as well as provide the funds needed to meet payroll. Banks and credit unions also enable consumers to make large purchases such as autos and homes.

When financing was severely restricted for legitimate lending needs, economic activity came to a halt, consumers headed into hibernation, and companies reacted accordingly.

The 5 million plus decline in payrolls since late 2007 has been the biggest drop on record. Moreover, the percentage decline in job losses has exceeded the severity seen in the steep contractions of 1974 and 1982. For those keeping track, the recessions in the late 1940s and late 1950s produced greater percentage declines, but that provides little solace right now for those searching for new opportunities.

But let’s not end on a glum note. It is important to point out that despite the poor near-term outlook for the labor market, companies have not stopped hiring.

Friends, family, and networking contacts are a great avenue to find new leads and many job transition groups have sprung up in local churches and communities. I also spotted this list of companies that are looking for new talent, which includes some of the largest firms in the nation.

If you are so inclined, another batch of insightful articles can be viewed on my homepage at Examiner.com.