5.1 Million Jobs Erased Thus Far

Friday's labor report brought renewed fears that the labor market is still mired in a vicious recession. The Census Department revealed that nonfarm payrolls plunged by 663,000 in March, raising the unemployment rate to a 26-year high of 8.5%.

Since December of 2007, employers have slashed workforces to the tune of 5.1 million jobs. Piling the bad news on, January job losses were revised up to 741,000, marking a 60-year high. February losses totaled 651,000. Total hours worked declined by 1% while the average workweek slipped to a record low of 33.2 hours.

Health care was the lone major sector to post an increase in employment, adding 14,000 jobs in March. Service industries shed 358,000 workers, manufacturers cut 126,000, and retail companies sliced 48,000.

In a separate report, on Thursday, April 2nd, weekly jobless claims climbed 12,000 to 669,000 for the week ended March 28. Continuing claims for the week ended March 21 soared to a new all-time record of 5.728 million.

Most experts believe things will get worse before they get better.

PIMCO founder Bill Gross forecasts unemployment will rise past 10% and that the economy is in the midst of resetting. "Those that would look for bottoms in the economy or the stock market, though, I think are really focusing on the wrong thing, because that implies that we're going to what is a normal stasis. We think that's incorrect."

March's bank-led rally gave some investors hope that the market was bottoming towards what Gross calls a "post-levered" economy. Yet Friday's report is signaling anything but a recovery. Companies are cutting costs via employment draw downs, reduced inventory, and dividend reductions.

While Wall Street wonders when the economy will bounce back, the more important question is how the labor market will rebound? More specifically, where will the U.S. economy create new jobs to replace a growing contingent of unemployed workers? With global producers retrenching, the central cog of debt-induced growth over the last several decades is grinding to a halt.

Clearly, the U.S. is lodged in the mature phase of a macro business cycle. Companies are increasingly looking overseas, specifically to BRIC nations, for growth drivers. President Obama has made much of the fact that his spending plans will create millions of new jobs in evolutionary industries like green technology. With 5.1 million positions already stamped out since the recession officially began back in 2007, the new economy will undoubtedly emerge as a different animal, regardless of whether the President can deliver on his promise.