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Citigroup announced today that they will be cutting more than 50,000 jobs in the “near term.” This is on top of the 23,000 jobs that they have already cut and will leave the company with approximately 300,000 employees globally. Even though non-farm payrolls dropped by more than 200k in September and October, Citigroup’s layoffs and job cuts by other companies will drive non-farm payrolls even lower.
In analyzing non-farm payrolls data during recessions, we see that at the beginning of an official recession, as defined by the National Bureau of Economic Research, non-farm payrolls start to decline rapidly. However after falling between 200k and 300k, job cuts stall and then pick up once again. We saw this trend in the 1981 to 1982 recession, the 1990 to 1991 recession and during the 2001 recession. I betcha it will happen in this recession as well.
The following chart illustrates the double dip trend of non-farm payrolls during the 2001 and recession.