Hospitals and schools look safe during rough times, but construction and real estate are looking grim as unemployment rising.
WASHINGTON — Hospitals, schools and the assembly line at an airplane factory look like pretty good places to be with a recession looming and unemployment rising. Construction workers, real-estate agents and auto workers aren’t expected to fare as well.
The startling news that the economy lost 80,000 jobs in May and nearly a quarter-million over the last three months is the starkest signal yet that the country has probably fallen into a recession, with things on the job front expected to get worse.
“All the indicators suggest that we will see even larger job declines in coming months. Businesses are getting nervous and pulling back,” said Mark Zandi, chief economist at Moody’s Economy.com.
While the downturn is expected to be short and mild, economists are still forecasting the unemployment rate will climb much higher before the nation’s job engine sputters back to life.
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Economists are forecasting a jobless rate that will peak at around 6 percent but probably not until early next year, several months after the recession is expected to end.
Analysts said as many as 2 million people could lose their jobs in the downturn.
In an environment of a sluggish economy and rising unemployment, analysts said there will be some safe harbors where job demand will keep growing.
First and foremost in this group will be health care, where the demographics of an aging population mean the demands for medical care will keep rising.
Also a bright spot in a generally bleak jobs picture will be education, again driven by the demographics of a rising population of school-age children and students attending colleges, community colleges and trade schools.
Outside of those areas, the falling value of the dollar against many foreign currencies is helping to power an export boom.
This is benefiting farmers and some segments of manufacturing, particularly airplane makers and factories producing various types of heavy machinery where the United States enjoys a competitive edge.
In general, hiring is expected to hold up in areas where consumers will keep spending money regardless of the health of the economy, such as at groceries, gasoline stations and repair shops.
But companies selling discretionary services — such as segments of the tourism industry, from airline travel to hotels to restaurants — are likely to experience more layoffs.
“Anything that people can defer, like a vacation or buying a new car, tends to suffer,” said David Wyss, chief economist at Standard & Poor’s in New York.
“The basics like food and medicine tend to do pretty well.”
Small businesses, which generate the bulk of the country’s new jobs, are decidedly more pessimistic.
William Dunkelberg, chief economist at the National Federation of Independent Businesses, said hiring plans had plummeted, with the number of firms saying they planned to hire new workers exceeding those planning job cuts by just 3 percent in March, down from 11 percent in the group’s February survey.
Federal, state and local government employment generally holds up during a recession because of increased demand for services, although some states are warning of cutbacks due to falling tax revenues.
Nigel Gault, chief U.S. economist at Global Insight, said he expected a mild recession that will end when tax-rebate checks are spent this summer.
He said he wasn’t looking for as big a rise in unemployment as the 2001 downturn because companies have not added as many workers to their payrolls during the current expansion.
“We think companies are starting from a leaner position so they won’t have to lay off as many people,” he said.