Job losses still ginormous

July 1, 2009

ADP this morning came out with its survey of joblessess, reporting that private sector nonfarm payrolls dropped by 473K in June, but noted that losses originally reported in May and April were slightly less than had been originally reported.

Some may take this as a reason to celebrate since -473K marks another month showing a slowdown in job losses since they hit their peak at -736K in March. But 473K jobs lost in a single month, especially given the blood letting we’ve seen since the nosedive in financial markets in September, is still impressive, and worrying.

Many take comfort in the fact that jobs data is a lagging indicator, but given the state of the U.S. housing  and the U.S. consumer, the speed and depth of job losses still threatens to  undermine already flagging consumer confidence further and spark more delinquencies in prime home loans and credit card debt.

Yesterday, the government reported that such home loan delinquenices had already shot up in the first quarter, even as loan modifications spiked.

From Reuters:

The U.S. government report showed that servicers implemented 185,156 loan modifications during the first quarter, up 55 percent from the prior quarter.

The report also showed that seriously delinquent mortgages, defined as loans that are 60 or more days past due, increased by nearly 9 percent from the prior quarter to 5 percent of all mortgages in the portfolio.

The portfolio includes 34 million loans worth $6 trillion, or about 64 percent of all mortgages in the United States.

Prime loans experienced the biggest increase in serious delinquencies, which rose by more than 20 percent from the prior quarter to 2.9 percent of all such mortgages.

And if it’s not the layoffs that hurt the debt-laden consumer, it’s stiffer credit card fees.

From the FT:

Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks.

People close to the situation said that Citi, which is about to cede a 34 per cent stake to the US government as part of its latest rescue, had upped rates on between 13m and 15m credit cards it co-brands with retailers such as Sears…

Holders of co-branded cards who failed to pay their balance in full at the end of the month saw their rates rise by an average 24 per cent – or nearly 3 percentage points – between January and April, according to a Credit Suisse analysis of data from the consultancy Lightspeed Research.

There’s still long slog ahead of digging consumers and the economy out of the credit pit.

One comment

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While we are hearing news that job losses are slowing , largely due to the fact there are few jobs left!

The fact is people are still losing their jobs and they are not having success with finding a job.

Until the average consumer regains confidence in the markets things will continue to look grim.

Something has to be done to get consumers earning a living again. When people start looking for new and innovative ways to get work the solution is not to far off.

In my mentorship program not only have I been showing the average consumer how to earn a living in this economy, I have also been teaching them how to spend responsibily in this economy.

It’s more than getting people back to work that’s important, we must be teaching people how to spend again but spend responsibly.

Just my 2 cents…