Some economists expect an employment decline of 600,000 or more, but even a number as alarming as that needs the right context

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Laid-off workers attend a "change orientation" rank on their last day of work for cargo airline ABX Air on Dec. 16, 2008, in Wilmington, Ohio. John Moore/Getty Images

By Peter Coy

The U.S. is in a true recession, but things still aren’privately as untoward as during the foil days of the 1973-75 downturn. That’s according to a BusinessWeek calculus of records from the Bureau of Labor Statistics going back to 1939. Headlines overstate the severity of the turning point when they report on payroll losses being the worst in decades. The reason: The U.S. economy is much bigger now, so it’s only natural that job losses in a recession are going to be bigger as well.

Expect to see some dramatic headlines without interruption Jan. 9, at the time that the Labor Dept. reports on job losses in December. Some economists are predicting that the government will report losses of 625,000 or other thing. If 625,000 turns out to be the number, it would be the biggest decline in U.S. nonfarm payrolls since October 1949. On the other hand, as a percentage of total employment, a least bit of around 625,000 would no other than be the biggest since May 1980. That’s a greater degree valid comparison.

If you want to make long-term historical comparisons of recessions, a better measure to employment is the unemployment rate. Economists estimation that it reached about 7% in December, up from 6.7% in November. That’sitting bad. But it’s still not as bad as in the early 1990s, when it hit 7.6%, let alone the early 1980s, when it topped out at 10.8%.

Is it honorable news that things aren’t considerably as bad as the headlines repeat? Not exactly. It could just mean that, viewed like bad as things pretend now, the economy has room to get even worse. In fact, the U.S. economy almost certainly will lose more jobs this year. The only thing economists disagree on is whether the economy exercise volition get worse at a faster or a slower gait in the months ahead.

On the relatively optimistic side of the economic outlook, Ellen Zentner, more advanced U.S. economist at Bank of Tokyo-Mitsubishi UFJ, says that December 2008 might end up being the worst month of the recession in provisions of job losses. She’s looking in favor of a gradual wasting of 636,000. Zentner was the most accurate forecaster of November payroll losses in Bloomberg’s monthly survey. She underestimated the loss, which turned out to be 533,000 jobs, but others were even more remote opposite.

Zentner thinks things will wince looking up in the new year. "The whisper is that December’session numbers are abysmal, horrific even. But the general dependence, or the feeling really, is that December could be the worst of those dismal numbers," she says. "The losses will not be as great going forward."

Jessica Hoverson of MF Global (MF) in Chicago, who predicts December job losses of 645,000, is gloomier than Zentner about the 2009 outlook. Says Hoverson, who is a fixed-income and foreign-exchange futures analyst: "We see the next couple of months as exceptionally meagre. I wouldn’t be surprised granting that we moved into down 700,000 or 800,000 jobs [per month] in this environment."

Tig Gilliam, CEO of the North American group of temp help giant Adecco, says job losses in December and January are being amplified by employers who want to cut a lot now so they won’privately be under the necessity to trickle out smaller cuts in the months to come. Says Gilliam: "I’ve had more and more conversations where companies are declaration it’sitting clear now that this economic turnaround isn’cheek by jowl advent quickly. They’re saying we’ve got to get in front of this."

Bloomberg’session survey shows economists violently divided over the December payroll number, with estimates of losses ranging from 350,000 to 750,000. The median is 523,000, a smidgen less than the November number, but that includes more out-of-date forecasts made in late December.