The latest news from the US is simply jaw-dropping. More than half a million jobs lost in November alone – the biggest monthly drop in employment in more than three decades. The unemployment rate is now 6.7 per cent, according to the US labour department.
The news is worse even than economists’ gloomy forecast of about 340,000 job cuts. In fact, 1.2m Americans have become unemployed in just three months.
UK political commentators continue to insist that the US predicament is unique. Any similarities with Britain should not be over-played.
But remember; whatever the structural differences between the two economies, we enjoyed the same debt-fuelled boom as the Americans.
We are just at a different point in the cycle. Their housing bubble began to burst about 18 months before ours did. The full consequences are yet to be felt here.
(The US has been officially in recession since December 2007. The UK is in recession – that much is clear – but not “officially” so until after the New Year*.)
We’ve already seen headlines of thousands of job losses in the UK from all sectors; not just the obvious ones like banking and housebuilding. Many, many more are yet to come.
* The technical definition of a recession is when an economy shrinks for two quarters in succession. Output fell by 0.5 per cent between July and September.
Jim Pickard
Kiran Stacey