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February 2002, Vol. 125, No. 2

U.S. labor market in 2001: economy enters a recession

David S. Langdon, Terence M. McMenamin and Thomas J. Krolik

The Nation’s longest postwar expansion ended in 2001, as the U.S. economy entered a recession in March 2001, after an unprecedented 10 years of growth.¹  Manufacturing’s downturn started in late summer of 2000 and deepened in 2001, as businesses sharply reduced spending on machinery, computers, and other capital goods. However, retail sales and the housing market, both of which tend to be highly cyclical, held steady throughout most 2001. Consumers’ steadfastness did waver in the fourth quarter, as rising unemployment coupled with the psychological and economic effects of the tragic events of September 11 depressed consumer confidence.² 

Nonfarm payroll employment fell 762,000, or 0.6 percent, in 2001. (See table 1.) Falling orders led factories to cut more than 1 million jobs from their payrolls. This retrenchment led to job losses in wholesale trade and transportation, and to a massive cutback in factories’ use of temporary help services. Construction and retail trade had small employment gains, as hiring early in the year barely offset declines over the rest the year. Job cutbacks in the travel industry intensified in the aftermath of September 11. In contrast, health services and public and private higher education stepped up hiring in 2001.

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Footnotes

1 Recessions are determined by the National Bureau of Economic Research. See details at http://www.nber.org/cycles/november2001/recessnov.html (visited January 2002).

2 On September 11, 2001, terrorists attacked three locations in the United States. Terrorist pilots hijacked commercial jetliners and crashed them into each of the twin towers of the World Trade Center in New York City, and into the Pentagon, in Arlington, Virginia. The hijacking attempt of a fourth jetliner was aborted in a field in Pennsylvania.

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Labor Force Statistics from the Current Population Survey
Local Area Unemployment Statistics
Nonfarm Payroll Statistics from the Current Employment Statistics (National)

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