commissioner.org
| Source | Louis Proyect |
| Date | 10/01/09/11:24 |
| NY Times
U.S. Job Losses in December Dim Hopes for Quick Upswing By PETER S. GOODMAN The nation lost 85,000 jobs from the economy in December, the Labor Department reported Friday, as hopes for a vigorous recovery ran headlong into the prospect that paychecks could remain painfully scarce into next year. “We’re still losing jobs,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “It’s nothing like we had in the free fall of last winter, but we’re not about to turn around. We’re still looking at a really weak economy.” The disappointing snapshot of the job market intensified pressure on the Obama administration to show results for the $787 billion spending bill it championed last year to stimulate the economy. At a news conference, Mr. Obama acknowledged the December data as a setback, while outlining plans to deliver $2.3 billion in tax credits to spur manufacturing jobs in clean energy. “We have to continue to explore every avenue to accelerate the return to hiring,” the president told reporters. Most economists assume the unemployment rate — which held steady at 10 percent in December — will worsen in coming months. The nation would then confront the highest jobless rate in a generation on the eve of November elections that will determine the balance of power in Congress. Mark Zandi, chief economist at Moody’s Economy.com, forecasts that the unemployment rate will reach 10.8 percent by October. The so-called underemployment rate — which counts people who have given up looking for work and those who are working part time for lack of full-time positions — now sits at 17.3 percent. Mr. Zandi argues that the economy requires an additional $125 billion jolt of stimulus spending on construction projects and aid to state and local governments — a proposal that confronts enormous political challenges. Republicans assert the first dose of stimulus spending has been squandered on dubious projects. The Obama administration, increasingly concerned by the size of federal deficits, is loath to spend more. Mr. Zandi argues that a failure to spend now to spur growth could leave the United States in a bigger hole. “If we don’t do it and we slide back into recession,” he said, “that’s going to exacerbate the deficit even more.” The December jobs report included one encouraging milestone: Data for November was revised to show the economy gained 4,000 jobs that month, compared with initial reports showing a net loss of 11,000 jobs. That was the first monthly improvement since the recession began two years ago. But the December data failed to repeat the trend, disappointing economists, who had generally expected a decline of 10,000 jobs. The report showed continued slowing in the pace of job losses, but it also underscored that companies were reluctant to hire. For a fifth consecutive month, temporary help services expanded, adding 47,000 positions in December. That buttressed the notion that companies required more labor, even as they held off hiring full-time workers. “We’re going in the right direction,” said Michael T. Darda, chief economist at MKM Partners, a research and trading firm. “If we just have a little bit of patience, we’ll start to see monthly increases of 200,000 to 300,000 jobs within six months.” But millions of people still grappling with the bite of the worst downturn since the Great Depression have exhausted their patience — along with their savings and confidence. In Charlotte, N.C., Kumar G. Navile, 33, says he has applied for 500 jobs in the year since he lost his position as an engineer. “You get up every day and say today will be different, but it is mentally challenging,” Mr. Navile said. “I performed well in school. I got a job the day I graduated. It’s been a struggle.” For those out of work, the market is bleaker than ever. The average duration of unemployment reached 29 weeks in December, the longest since the government began tracking such data in 1948. “There is almost no hiring going on outside the temporary help sector,” said Andrew Stettner, deputy director of the National Employment Law Project. Despite the parsing of data and contrasting economic forecasts, no complexity cloaked the basic facts of the report: job openings remain scarce. “Most people, they’re not looking at the data,” Mr. Baker said. “They’re just asking, ‘Can I get a job?’ And that’s not getting any easier.” The government’s monthly jobs report, while always important, now stands as the crucial indicator of economic health. For years, households spent in excess of incomes by borrowing against the value of homes, leaning on credit cards and tapping stock portfolios. But home prices have plummeted, stock holdings have diminished and nervous banks have sliced credit even for healthy borrowers, leaving the paycheck as the primary source of household finance. Economists are divided over the nation’s economic prospects. Some argue that recent expansion on the factory floor presages broader economic improvement that will soon deliver job growth. Not yet. Manufacturing lost 27,000 jobs in December. Construction jobs declined by 53,000. Government shed 21,000 jobs. Despite a surprisingly strong holiday shopping season, retailing lost 10,000 jobs. Health care remained a bright spot, expanding by 22,000 jobs. Skeptics argue that the factory expansion merely reflects a rebuilding of inventories after businesses slashed stocks during the panic. Expansion has been aided by stimulus spending and tax credits for homebuyers. Once these factors fade in coming months, skeptics argue, the economy will confront stubborn challenges — cash-tight households curtailing spending, banks reluctant to lend and businesses unwilling to hire. Those with the gloomiest outlooks envision a “double dip” recession, in which the economy resumes contracting. Others fear years of stagnation, like Japan’s Lost Decade in the 1990s. One point of agreement among economists is that the nation cannot recover without millions of new jobs. The economy needs about 100,000 new jobs a month just to keep pace with people entering the work force. When workers gain wages, they spend them at other businesses, creating jobs for other workers — a virtuous cycle, in the parlance of economists. Recent months have produced tentative signs that such a cycle might be unfolding, even as economists debate its sustainability. The December jobs report added to the ambiguity. On the one hand, job losses undermined hopes for a quick turnaround. Yet the losses were a far cry from the roughly 700,000 monthly job losses seen a year ago. “Standing still feels good when you’ve been used to falling backwards,” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group. “But we want to move forward.” Javier C. Hernandez contributed reporting. |
Copyright (c) 1998, Joongpil Cho