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Employment in financial activities: double billed by housing and financial crises
George Prassas
George Prassas is an economist in the Office of Employment and Unemployment Statistics, Bureau of Labor Statistics. E-mail: prassas.george@bls.gov
The housing market crash, followed by the financial crisis of the 2007-09 recession, helped depress financial activities employment; the industry recorded historic monthly job losses that persisted even after the recession ended
Historically, employment in financial activities 1 has been affected little by economic downturns and usually has grown during an entire recession or started to grow shortly after a recession began. In stark contrast, employment in financial activities grew more slowly in 2006 and eventually peaked in December 2006, 2 1 year before the official start of the December 2007–June 2009 recession. 3 Even after the recession ended, employment in financial activities continued to decline.
Leading into the 2007-09 recession, most employment losses in financial activities were concentrated in industries directly involved in buying and selling homes. However, after the stock market declined sharply in September 2008, all industries within the financial sector began to cut jobs at unprecedented rates. These employment losses were uncharacteristic compared with those sustained in previous downturns.
1 This article uses the term “financial activities” to denote the North American Industry Classification System (NAICS; see North American Industry Classification System: United States, 1997 (U.S. Census Bureau, 1997), and North American Industry Classification System, 2002 (U.S. Census Bureau, 2002)) industry sectors 52, or “finance and insurance,” and 53, or “real estate and rental and leasing.”
2 The data on employment used in this article are from the Current Employment Statistics (CES) survey, a monthly survey of approximately 140,000 nonfarm business and government agencies representing approximately 440,000 individual worksites. For more information on the survey’s concepts and methodology, see “Technical Notes to Establishment Survey Data Published in Employment and Earnings” (U.S. Bureau of Labor Statistics, Feb. 4, 2011), www.bls.gov//web/empsit/cestn2.htm (visited Apr. 12, 2011). To access CES data, see “Current Employment Statistics - CES (National)” (U.S. Bureau of Labor Statistics, no date), www.bls.gov/ces/ (visited Apr. 12, 2011). The CES data used in this article are seasonally adjusted unless otherwise noted.
3 Recessions are identified by the National Bureau of Economic Research (NBER), according to which the most recent recession began in December 2007 and ended in July 2009. The previous two recessions were from March 2001 to November 2001 and from July 1990 to March 1991, respectively. For a complete list of business cycle dates, see “U.S. Business Cycle Expansions and Contractions” (Cambridge, MA, National Bureau of Economic Research, Apr. 4, 2011), www.nber.org/cycles/cyclesmain.html (visited Nov. 2, 2010).
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