The 8 7 Jolt Last month s jobless rate most in 25 years

The near doubling of the unemployment rate in North Carolina in the past year has been enough to knock the breath out of even seasoned economists.

And the 2009 job market is likely to get worse before it gets better -- if it does, the economists say.

The state unemployment rate reached its highest point in more than 25 years in December, climbing to 8.7 percent, the N.C. Employment Security Commission reported yesterday.

And it rose nearly a full percentage point from November's 7.8 percent mark. October's unemployment rate was 7.1 percent.

By comparison, the rate was 4.7 percent in December 2007 -- just below the 5 percent rate that most economists consider as a sign of full employment.

The commission also reported that the number of North Carolinians considered unemployed has risen 87.5 percent in the past year -- from 211,662 in December 2007 to 396,846 in December 2008.

Meanwhile, the state's labor force, at 4.56 million, didn't even grow 1 percent.

"While we should not make too much out of a one-month jump, the increase does coincide with incredibly bleak economic news reported over the past few months," said Mark Vitner, a senior economist at Wachovia Corp.

"The increase in the unemployment rate is alarming -- not just in December but over the past year" Vitner said. "This is devastating for the state, and this increase has occurred before the widely anticipated cutbacks in the state's financial-services sector have taken hold."

For example, December's rate does not include the 2,900 Wachovia workers in Winston-Salem and about 20,000 in Charlotte still bracing for the job ramifications of the bank's merger with Wells Fargo & Co. Also expected are waves of job cuts from a beleaguered Bank of America Corp. in Charlotte and a trickle of job cuts by BB&T Corp. in the Triad.

"I think all economists and business people that follow the state's economy will have to rethink how deep and protracted this recession will be," Vitner said.

Some economists have said that North Carolina's economy is increasingly feeling the blow of the national recession after avoiding it for most of 2008.

"It's another sobering month," said Michael Walden, an economics professor at N.C. State University in Raleigh. "We've now had back-to-back months of a spike in unemployment in the state. The recession, which started later in North Carolina, is now in full force.

"Today's announcement virtually assures we'll hit 10 percent later this year. The only silver lining I can see -- health-care jobs continue to increase," he said.

The commission reported that there were major losses in four job sectors.

Professional and business services shed 11,400 jobs during December, along with 8,300 in the trade, transportation and utilities; 7,100 in construction; and 5,600 in manufacturing.

Also undergoing job losses during the month were government at 2,800, and leisure and hospitality services at 1,500.

Educational and health services, at 1,000, was the only sector to post a key net gain in jobs.

John Quinterno, a research associate at the N.C. Budget & Tax Center, said that recognizing economic realities requires understanding that the state simply cannot cut its way to solvency.

"There is simply no reason to assume that the economy will get better on its own," Quinterno said. "The only way to slow the painful economic trends, or reverse them, is significant federal recovery action."

The economists said that North Carolina's reputation as a growth state should not be dented by the tightening job market.

"It would take a lot more bad news than this to damage our reputation," Vitner said.

"We will continue to account for a large proportion of future job growth. The recession is just hitting our state much harder than anyone expected."

But Archie Hicks, the manager of the commission's office in Winston-Salem, isn't so sure.

"Long-term, this could adversely impact how we are perceived as the place to go to look for work barring any significant job gains," Hicks said.

http://www2.journalnow.com/content/2009/jan/24/the-87-jolt-last-months-jobless

Business Financial Services

The 8 7 Jolt Last month s jobless rate most in 25 years