Scramble Hits Wall Street

FROM THE NEW YORK SUN

"The full impact of layoffs stemming from the subprime fallout has yet to be felt," the chief economist at Moody's Investors Service, John Lonski, said. "You will see layoffs begin to pick up toward year end and continue through the first quarter of next year."

During the last recession, financial industry employment in New York peaked in the third quarter of 1987 with 262,000 jobs. It reached its nadir three years later, with 209,000 jobs — a drop of 20%, according to Mr. Lonski. This means that in the last downturn, one out of every five jobs on Wall Street was lost. It took more than five years before the financial sector regained its pre-recession hiring levels.

"If the damage is broader than we anticipated, we could see 20% job cuts again," a professor of finance at the College of Business Administration at Northeastern University, Harlan Platt, said. "The simplest way to cut costs is to let people go."

October's national jobless rate was 4.7%, the same as September, besting Wall Street estimates. Still, this number is actually 0.3 percentage points higher than last year — the steepest yearly gain since October 2003, according to Mr. Lonski. In addition, October's three-month ratio of employment to the working-age population was down 0.4%. Since 1969, each time this number dropped by 0.5%, a recession occurred, he said.

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