CE Week #5: “Jobs Report Highlights Shaky U.S. Recovery” Oct. 3rd
October 3, 2009
By PETER S. GOODMAN
After several months in which the American economy flashed tentative signs of improvement, a sobering report on the national job market released on Friday amplified worries that a lengthy period of lean times lay ahead.
The economy shed 263,000 jobs in September, and the unemployment rate edged up to 9.8 percent from 9.7 percent in August, according to the Labor Department’s monthly snapshot of the employment picture.
Though the job market worsened, the pace of deterioration remained markedly slower than during the early months of the year, when roughly 700,000 jobs a month were disappearing. That improvement seems consistent with the widespread belief that the recession has given way to economic growth. Yet the report also buttressed fears that economic expansion would be weak and hesitant, with scarce paychecks and economic anxiety remaining prominent features of American life well into next year.
“This is a weak report,” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. “The rate of job loss has tapered off, but we still haven’t reached the point where businesses are willing to hire.”
The Labor Department also made a preliminary revision in its survey of private employers that indicated the job market shrank even more during the recession. The department disclosed that in March this year the economy held 824,000 fewer jobs than previously reported, making an already bleak picture worse.
The endurance of hard times seems likely to increase pressure on the Obama administration and Congress to consider another dose of spending aimed at stimulating the economy, even as the government grapples with deficits projected by some economists to exceed $10 trillion over the next decade.
Despite a $787 billion stimulus package adopted early this year and aimed in part at shoring up state and local coffers, government jobs slipped by 53,000 in September.
“That’s the budget crunch hitting,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “We’re still losing jobs at a very rapid pace. We’re still looking at an economy with a lot of weakness.”
For millions of unemployed people, the latest data merely confirms something they have come to understand intimately, through the discouraging process of seeking work.
“There’s nothing out there,” said Jerry Lamirande, a technology systems engineer in Amarillo, Tex., who has been without a job since April 2008.
During the technology boom of the late 1990s, Mr. Lamirande, 62, worked for I.B.M., where he drew a salary of about $130,000. After a layoff seven years ago, he has earned about $70,000 a year as a technology consultant working on contract.
Since the spring, he and his wife have lived on her modest salary as a public school teacher and on hardship withdrawals from his retirement account. He has searched nationwide for his next contract, willing to relocate.
“I’ve got to go where the opportunities are,” he said. “The problem is, there aren’t many opportunities.”
The latest jobs report lent credence to that contention. The unemployment rate continued to inch toward double digits, a level last seen in June 1983. The so-called underemployment rate (which includes people whose hours have been cut, and those working part-time for lack of full-time positions, along with the jobless) reached 17 percent, the highest level since the government began tracking it in 1994.
More jobs were lost last month, at 263,000, than were lost in August, as the Labor Department revised the August decline to 201,000 jobs from the 216,000 it initially reported.
Health care remained a rare bright spot, adding 19,000 jobs in September, but construction jobs slipped by 64,000, manufacturing declined by 51,000 and retail lost 39,000 jobs.
Most economists assume the economy expanded at an annual pace of about three percent from July through September. But debate focuses on the vigor and staying power of the recovery.
Optimists anticipate a robust bounce-back from what now stands as the longest recession since the Great Depression. But most economists expect a sustained slog through high rates of joblessness.
The economic improvement in recent months largely stems from businesses cutting inventories at a slower pace. As some companies begin to rebuild stocks, the impact could wash through the economy for a few more months, adding jobs and moderating the overall decline.
Then the underlying weakness of the economy will probably reassert itself, say experts. After years of borrowing against homes and cashing in stock to spend in excess of their incomes, many Americans are tapped out. Austerity and saving have replaced spending and investment in many households, constraining the economy.
As many Americans transition from living on home equity loans to sustaining themselves on paychecks, weekly pay continues to effectively shrink: Over the last year, average hourly earnings for rank-and-file workers — some 80 percent of the labor force — have increased by 2.5 percent. But average weekly earnings have expanded by only 0.7 percent, less than the increase in the cost of living, because employers have slashed working hours.
In September, the average workweek edged down by one-tenth of an hour, to 33 hours.
For those out of work, the job market looks harsher now than at any point in the recession. The number of people who have been jobless for more than six months increased in September by 450,000, reaching 5.4 million.
“We have a truly massive crisis of long-term unemployment,” said Christine L. Owens, executive director of the National Employment Law Project in a statement, adding that nearly 400,000 jobless people had exhausted their unemployment benefits by the end of September. “Today’s employment report is a marching order for Congress to pass unemployment benefit extensions to all states, quickly.”
The first signs of improvement are likely to be seen among temporary workers, say experts, as companies now hunkering down in the face of uncertain prospects take tentative steps to expand.
But temporary help services lost 1,700 jobs in September.
“Companies are extremely cautious,” said Roy G. Krause, chief executive of Spherion, a recruiting and staffing company based in Fort Lauderdale, Fla.
All of which translates into continued apprehension in many households.
“It’s terrifying,” said Stephanie Wheeler, 56, of Elizabeth, N.J., who has drained her savings to $800 in the year since she lost her job at a data-processing company, rendering her ability to pay the rent on her apartment uncertain.
“I’ve been here for eight years,” she said. “I don’t know what’s going to happen. I’m petrified of being set out on the street.”
Jack Healy contributed reporting.
A. I knew that the economy was suffering from many different factors. For one, the banks decided to handle their money irresponsibly and give money out in a careless manner. Also the saturated consumer market contributed to this deterioration of the economy. Little things like the writers’ strike, which hurt the multibillion dollar entertainment industry, and increasing gas prices have contributed to this.
B. I think that by cutting back drastically companies are hurting other industries and in turn hurting themselves. While it is not necessarily an ideal solution, I think businesses should try to maintain their current workforce. If there were 1000 businesses in Spokane, which pay employees $500 a week and each of these businesses cut one employee that is $500,000 of capital each week that never sees the economy. That is $26,000,000 a year. These funds would stimulate the economy and are necessary if we want recovery. These numbers are small in comparison to what has been lost by everyone who has been unemployed in Spokane. I know that small businesses need to make very tough decisions in order stay afloat, but bigger companies who can afford to keep their employees and have a smaller profit margin (they are still making profit in this case, just not as much as they would like) will probably see a much greater return in the near future than if they were to lay off employees. It has to be a collective action though! The big companies need to collectively recognize this for it to even be fathomable, which will likely not happen.
C. I would like to know the unemployment rate in Washington vs the national unemployment rate. I hear that Washington has not seen as much of the devastating effects of the economy compared to other states, but I am not sure how true that is. I have heard that it may be because of our high wages, which would possibly make sense, but it needs numbers to validate it.
What I have learned from this article is that the economy is responsible for discarding 263,000 jobs in September 2009. Unemployment has reached 9.8 percent. The Labor Department says that “We’re still losing jobs at a very rapid pace.” Healthcare remained a rare bright spot, adding 19,000 jobs in September, but construction jobs dropped by 64,000; manufacturing declined by 51,000 and retail lost 39,000 jobs. Most economists assume the economy expanded at an annual pace of about three percent from July through September. For those out of work, the job market looks harsher now than at any point in the recession.
I believe that president Obama should be focusing on ways to improve the unemployment, and then focus on health care. The health care may have added some jobs, but construction alone lost more jobs then what the health care provided. Even with the cash for clunkers, we were stimulating the foreign trade. We need to start stimulating the United States economy. Obama needs to start to build the trust of Americans in their economy.
The question that I have is that I look at the recession and see a domino affect. How do we stop the dominos before it leads to a depression? This is a scary time and I would hate to live in the middle of a depression. How do we stop the dominos and set them up right again?
Drew Williams
Learned:
I learned that the economy lost 263,000 jobs in September. And that the unemployment rate went up to 9.8% from 9.7%. I didn’t know that we were losing job opportunities. I learned from this article that we might spend around 10 trillion dollars in the next ten years, even though we just came out with a stimulus package that gave us 787 billion dollars. I didn’t know that even governmental jobs are slipping as well. We have lost 53,000 government jobs in September. This recession stands as the longest lasting since the Great Depression. The amount of people that have not had a job for over six months has grown to 5.4 million people.
What I think:
We need to get help from other countries around the world. If we cut back, we are hurting a lot of jobs and companies financially. I believe that if we were to find jobs for people, they would have to be low paying jobs. I believe this because if we give them high paying jobs then we are giving them money, which in the long run adds up. In a couple years we may need to combine companies so that they would have enough money to support more jobs. I believe that Obama needs to find ways fast, and stop dealing with things like the Olympics.
Questions:
What are some ways in which we can get international aid to bust the economy?
How close are we to a depression?
A. First of all, I had no idea that 263,000 jobs were lost in September and the unemployment rate went up .1%. The unemployment rate right now is 17%, which I also did not know.
B. I think that it is a bad time right now for getting jobs and for keeping them, but people make it sound a lot worse than it actually is. I remember last year Mr. Schultz talking about the recession right now, and how it’s bad, but it’s not as bad as it was during the great depression. For people like Jerry Lamirande who say that there is nothing out there, has he tried looking? He has been jobless since April 2008 and it’s hard to believe that he hasn’t found a job yet. I understand that he wouldn’t have a career but he could bring in a little money to his family by getting a job somewhere else. I know people right now that have two jobs. You just need to know where to look.
C. I want to know what the unemployment rate in Spokane and Washington is. I also want to know if it is harder to get a job somewhere else like Texas than it is here. How long is this going to last?
A. Unemployment is a scary thing. I can’t imagine graduating from college and not being able to find a job or to have a husband laid off after years of a solid job. Not only have I noticed the increased unemployment on the news but I also know relatives and family friends who have been laid off and unable to find work for months. However, the article presented some facts which I have never heard before. I was shocked to read that 263,000 jobs were lost in September and the unemployment rate is increasing, reaching 9.8%. I also learned about underployment. Underployment “includes people whose hours have been cut, those working part-time for lack of full-time positions, along with the jobless.” The underployment rate has reached 17%.
B. I think that fixing the unemployment problem will end up helping our economy in the long run. Instead of the government investing money in short-lived programs, like the cash-for-clunkers program, they should devote time to producing more jobs. Because fewer people don’t have jobs, they are more reluctant to spend the only money they have. And those people with jobs are saving their money with the fear of losing their own job. If there was a more stable job market, people would probably spend their money, stimulating the economy. I know this is easier said than done, but there must be a way. I thought it was interesting how the article brought up health care adding 19,000 jobs in September. But with our country losing over 200,000 jobs a month, 19,000 added jobs doesn’t really make that big of an impact.
C. I’m interested to know how the unemployment rate today relates to that of the 1930s Great Depression time. How does the recession today compare to the Great Depression?
A. I’ve learned that the unemployment rate has gone up to 9.8%. 263,000 jobs have been lost in September alone. Companies have to cut back even more than before. Although with Health Care there was a 19,000 job increase in September, but 64,000 construction jobs were lost. Manufacturing lost 51,000 and retail lost 39,000. Although Health Care helped bring in more jobs, we are losing more than we are gaining. The economy isn’t doing so good right now with unemployment.
B. I think this isn’t good and more jobs need to come. But, we can’t just sit on our hopes chest and wish for more to come. It is scary to see where this is heading, but maybe we can do something about it.
C. I know we can’t get out our crystal ball and see what the future holds, but what do the economists say about where the unemployment rate is going? Is this going to turn into something worse than the Great Depression of the 1930’s? Since we are in a recession, are people really cutting back on a lot of things, or are they just spending as much as they did before the recession? I know that my family can’t have as much as we used to, but how are others dealing with this?
A. I learned that the unemployment rate hasn’t reached double digits since June of 1983. Every reaction to the recession affects the others making it a difficult thing to recover from. The loss of jobs is making people wonder how we as a country can bounce back from this. I also learned that healthcare jobs are still available and that jobs in things like technology and construction are decreasing at a fairly rapid rate.
B. I think that the posting of the statistics of the job deficit is causing Americans to be doubtful of a recovery from this long, drawn-out, recession. I also think that it has caused them to lose faith in the Obama administration as well, maybe even unjustly. It’s a difficult thing to become President of a country in such economic turmoil, and I respect him for doing all he can to make good of his promises and get America back on her feet. I was pleased to read that healthcare jobs actually increased, because I am planning on going to school to become a nurse. But, the length of the recession has me a little worried about what life will be like for me in the future. The debt of the government continues to skyrocket as they keep forking out millions of dollars in funds to help “stimulate” the economy.
C. What is the unemployment rate in the state of Washington in comparison with other states? And is the stimulus plan really working or just putting us deeper in the whole as an economy?
In response to Jesse Peterson-
I see what you are saying about how Obama should focus on unemployment rather than on healthcare. However, no matter what, people are going to complain. If he stops focusing on healthcare, people are going to complain and if he doesn’t focus on unemployment then people are also going to complain. I think that he should focus on both not just one. He can’t just stop working on one and then come back to it later.
In Response to Derrick Cunningham:
After I read your question, I was also interested to see how Washington’s unemployment rate compared to that of the national unemployment rate. I did some research and I found that Washington’s unemployment rate in August 2009 was 9.2%. That is still lower than the national rate of 9.8%. Washington seems to be in the middle of the spectrum when it comes to unemployment. The state with the highest rate is Michigan with 15.2%. I’m sure that has to do with that fact that the state is built around the automobile industry. The state with the lowest rate is North Dakota with 4.3%.
I don’t know if whether our wages relate to our unemployment or not. Washington has the highest state minimum wage, but we neither have the highest nor lowest unemployment rate.
In response to Kristina Nielsen:
I know that some people are like that, too lazy to look for a job. A lot of people are really trying to find a job. Some just don’t have the right kind of experience for the jobs that are available. A lot of people are worrying about the economy, even here in Spokane. Have you looked around at the stores lately? A lot of them are closing down. This is probably a good indicator that the economy is having a rough time bouncing back from the near depression our country is in.
Drew Williams –
Currently, the national debt is at about $12 trillion. Of that, foreign countries own about 25%. We owe China alone about $800 billion. Foreign countries are becoming less willing to invest in American debt and won’t help us get back on our feet by buying U.S. Treasury securities. Also, for the most part, companies are cutting jobs and wages to prevent them from slipping farther into debt or collapsing completely. If this were to happen anymore than it already does, the economy could be in for a worse slide. Also, the government doesn’t need to be involved in helping companies anymore than it already has. The federal government has already spent billions bailing out Citigroup, CIT Group, Bank of America and Fortis Bank and will own 60% of General Motors when the company emerges from bankruptcy. More government involvement will just lead to more debt and more government owned companies.