“The worst job numbers since 1945”, we heard from CNN this morning.

Well, that is not true. Today is different from 1945 for two reasons. First, our population is much larger. Second, there was an important technical factor — WWII (in September 1945 non-farm payrolls plunged by almost 5%).

Nevertheless, the news of 524,000 losses was bad enough. The real loss was close to 700,000 if you include the negative revisions to October and November.

How many more jobs will we lose?

So far in this recession, we have lost 2.6 million jobs. The exhibit below compares this recession with all post-WWII recessions. To allow for changes in the level of employment, I examine the December 2007 (beginning of the current recession) equivalent job losses.

Click here for an interview with Campbell Harvey discussing employment in the U.S.

For example, in the recession that began in November 1973, I calculate the percentage loss in non-farm employment (-1.62%). I apply that percentage loss to the December 2007 level of non-farm employment to get an equivalent job loss of 2.2 million (the actual job loss was 1.3 million). Essentially, I am making an apples to apples comparison.

The graph shows that this recession is already quite serious. We are getting close to matching the sum of the previous two recessions.

We don’t have that much further to go to match the serious 1981 recession. We would have to lose another 1.7 million jobs. At the current rate of decline, that could happen in three months!

I also calculate the average of the worst six recessions in the post-war period. Again, to match this average we only need to lose another 1.8 million jobs.

The worst downturn began in 1948. To match that episode, we would have to lose over 4 million additional jobs.

I expect another 3 million jobs lost. There are two reasons for this.

First, employment lags the business cycle. Indeed, it is not unusual to continue to lose jobs *after* the official end of the recession. In the each of the last few recessions, we lost on average 400,000 jobs in the six months following the official NBER “trough”.

Second, we have no economic indicator that would suggest that we are near the end of the recession. Indeed, the economic news suggests further deceleration.

What about the Obama job plan?

I factor this in already.

President-elect Obama was very careful in phrasing how to think of the success of his plan. Create or hold 3 million jobs.

The recent Duke-CFO Magazine survey suggested that corporate America was in crisis mode. CFOs said that they expected to slash 5% of their employees in 2009. That is a staggering number. From today’s level of employment, it represents more than 6 million jobs.

The 5% loss on our survey was hugely different from anything we have seen in the past. It was three standard deviations from the average.

Accounting for some normal turnover and the timing of the survey, I think that it is fair to adjust the CFO survey number to 5 million job losses. Let’s also (optimistically) assume that President-elect Obama is successful and that 2 million jobs are created in 2009 from his program (the goal is 3 million but some of those jobs would be created in 2010).

We get to my 3 million additional losses, 5 minus 2.

Currently, there are officially 11.1 million without jobs (and that increased by 632,000 in December). An additional, 3 million losses would push the unemployment rate past 9%.

This makes the current recession the worst since 1948. But the U.S. had a different economy in 1948. Most of the employment was in manufacturing which is very cyclical. Our economy has changed to a more service oriented economy which is less cyclical (think of health care for instance, even in a recession you need health care).

Allowing for the changing mix of jobs in our economy and for special factors in 1948 induced by the end of the war, you can make the case that the current episode is likely to be the worst since the 1930s.

While we are headed to near double digit unemployment, we are no where near the Great Depression which presented unemployment rates above 20%.