The recession deepened in the Tri-Cities metro area labor market during the fourth quarter, according to data compiled by F. Steb Hipple, professor of economics and research at ETSU.
Hipple said the national and regional labor market pictures that emerge in this report are not a surprise. "The economy is locked in the worst business downturn since 1981-82, and faces the first real risk of a genuine depression since the 1930s."
Employment in the Tri-Cities slumped by 0.9% to 231,849, a loss of over 2,100 jobs compared to the same period in 2007.
The number of unemployed workers increased 36.3% to 15,190, a jump of 4,044 on a year-to-year basis.
According to Hipple, the large increase in unemployment is not just the workers who have lost their jobs, but also includes nearly 2,000 additional workers who have entered the labor force looking for employment to help support their family incomes.
The jobless rate for the Tri-Cities area rose to 6.2%, compared to only 4.5% a year ago.
In the fourteen NAICS industry sectors, employment levels were higher in three, lower in seven, and unchanged in three (compared to four, nine, and one in the third quarter). Job growth occurred in education & health, finance, and information services. Employment declined in retail trade, professional & business services, durable manufacturing, government, nondurable manufacturing, wholesale trade, transport & utilities, and leisure & hospitality. Employment was stable in mining, construction, and other services.
CLICK HERE for the labor force, employment and unemployment data set.
Recession trends continued to plauge all three cities during the October to December period.
Job losses mounted while the number of unemployed was swelled by new job seekers.
Employment declined by 0.4% in Bristol, 1.0% in Kingsport, and 1.7% in Johnson City; unemployment levels increased by 34%, 41%, and 37% respectively.
The fourth quarter jobless rate was 5.8% in Kingsport, 6.0% in Bristol, and 6.2% in Johnson City (compared to 6.2% for the entire metro area).
CLICK HERE for the Bristol TN-VA Urbanized Area Labor Market data; Kingsport and Johnson City Urbanized data sets.
In the analysis portion of his report Hipple says, "the Great Depression was triggered by a collapse of the banking system following the end of the stock market speculative bubble in October 1929.
"The clever bankers of the 1920’s became intertwined with the stock market bubble, and when the stock market crashed, it took the banking sector and the national economy down as well. The process took four years (through 1933) to play out.
"This time the speculative bubble was in residential housing between 2003 and 2007. The clever bankers of our time became intertwined with the real estate bubble, and when the bubble burst in early 2007, it set off a process where the entire financial sector began to collapse – but much more quickly.
"That is the extreme risk we face today – the first melt-down of the financial system in over eighty years. But unlike the 1930’s, we do know what is happening and what needs to be done – fiscal stimulus in whatever amount it takes. In August 2008 we had the TARP stimulus package of $700 billion, half of which is still unspent. In February 2009 we have the Obama stimulus package of nearly $800 billion. Most analysts believe another stimulus round will be necessary.
"Even with the unprecedented fiscal intervention in the economy, the business situation is going to get worse over the next several months. The monthly data will continue to be bleak. But there will be an end to the recession and a turnaround in economic activity. In business cycle parlance, we are looking for a “trough” to be followed by a “recovery”.
"Many analysts are now looking for the trough by late spring or early summer. The fiscal stimulus will begin to take hold, and the financial system will finally become functional again (following the process of bank failures, bank mergers, and reregulation). However, do not expect instant prosperity.
"At the trough, the national unemployment rate will be close to nine percent. And if the recovery is weak, labor market conditions will continue to worsen and we may see double digit jobless rates by the end of the year, before the labor markets begin to improve. And a major psychological factor is we will officially remain in recession well into the recovery.
"Looking back at the business cycles of recent decades, we have precise months for peaks and troughs. What we forget is that these dates were announced well after the events. For example, the peak of the current business cycle was December 2007, but this was not announced until December 2008, twelve months later. The lag in identifying troughs is even longer.
"The trough of the 1990-91 recession was March 1991, but it was not identified until November 1992, some seventeen months later. The trough of the 2001 recession was November 2001, but it was not determined until July 2003, eighteen months later. So any trough in next few months will not be officially marked until mid 2010!"
And, according to Hipple's report, there are some points of note in the regional labor market picture.
"Tri-Cities construction employment was flat in the fourth quarter, after several quarters of growth. Nationally, construction employment has been dropping since early 2007.
"And despite job losses, most of the regional employment gains from 2005 and 2006 have been preserved. Compared to most other regions, the employment situation in the Tri-Cities has been less affected by the national recession."