(It is of some interest that the Times makes the comments of Dean Baker,
a fairly principled left-liberal economist, prominent.)
NY Times, April 4, 2009
No End in Sight to Job Losses; 663,000 More Cut in March
By PETER S. GOODMAN and JACK HEALY
The American economy surrendered 663,000 more jobs in March as the
unemployment rate surged to 8.5 percent, its highest level since 1983,
the government reported Friday.
The latest snapshot of accelerating decline in the national job market
lifted to 5.1 million the number of jobs lost since the recession began
in December 2007. More than two million jobs have disappeared over the
first three months alone.
The severity and breadth of the job losses — which afflicted nearly
every industry outside of education and health care — prompted
economists to conclude that an agonizing plunge in employment prospects
was still unfolding, with no clear turnaround in sight.
“It’s really just about as bad as can be imagined,” said Dean Baker, a
director of the Center for Economic and Policy Research in Washington.
“There’s just no way we’re anywhere near a bottom. We’ll be really lucky
if we stop losing jobs by the end of the year.”
The pace of retrenchment has prompted calls among some economists for
another wave of government stimulus spending to buttress the $787
billion already in the pipeline.
In January, as the Obama administration drafted plans for the current
round of stimulus spending, it assumed the unemployment rate would reach
8.9 percent by the last three months of the year.
“We’re clearly looking at a worse downturn than they had been
anticipating when they planned the stimulus,” Mr. Baker said. “We’re
going to need some more.”
But others — not least, decision-makers inside the Obama administration
— deem such talk premature. The jobs report, while dreadful, landed amid
tentative signs of improvement in some areas of the economy, with recent
snippets of data lifting stock markets and sowing cautious hopes that
the beginnings of a recovery might be taking shape.
The pace of decline in auto sales, while still falling, has slowed.
Houses have been selling in much greater numbers in important markets
like California and Florida, albeit at substantially reduced prices.
Consumer spending, while far from vigorous, appears to have leveled off
after plummeting over the last three months of 2008.
Meanwhile, a surge of government spending is just beginning to work its
way through the federal and state bureaucracies, aimed at spurring
demand for American goods and services. This spending is expected to
support jobs in construction and related industries later this year. The
administration is distributing more than $3 billion in aid to states to
train laid-off workers for new careers in so-called green industries,
like manufacturing solar- and wind-power equipment, and in health care.
“We’re attacking this in a very aggressive way,” the labor secretary,
Hilda L. Solis, said Friday in an interview, arguing that it was too
early to consider another round of stimulus spending. “We will revisit
that once we expend all the money that we have accrued.”
Much of the recent indications of potential economic improvement reflect
temporary seasonal factors rather than a sustainable trend, some
economists argue. Housing construction, for example, has looked more
robust in large part because January’s construction activity was slowed
by bad weather.
The crucial factors assailing the economy remain in force, with tattered
banks reluctant to lend, and even healthy households and businesses
averse to borrowing and spending in a time of grave uncertainty and fear.
The very perception that millions more will lose jobs and housing prices
will fall have turned such outlooks into reality: As businesses scramble
to cut costs in the face of gloomy sales prospects, many are shrinking
work forces, removing more paychecks from the economy and further
eroding spending power.
“There’s a lot of survival job-cutting going on throughout American
business,” said Stuart G. Hoffman, chief economist at PNC Financial
Group in Pittsburgh. “There won’t be any job growth at all this year.
The economy is far, far from being out of the woods.”
Still, Mr. Hoffman is among those inclined to wait for a few more months
and hope for improvement before unleashing a new wave of stimulus spending.
The Treasury has recently outlined plans for an expanded bank rescue
aimed at lowering borrowing costs for businesses and households, this
generating fresh economic activity and jobs.
In London, leaders of the world’s major economies left a summit meeting
this week with a promise to bolster the finances of the International
Monetary Fund by $500 billion, lending support to troubled economies
from Eastern Europe to Southeast Asia, perhaps increasing now plunging
global trade and thus demand for American-made goods.
“It’s a little soon to conclude politically, and I’d argue economically,
that we need some more stimulus,” Mr. Hoffman said. “You don’t just
double the dose if the patient doesn’t immediately improve.”
Friday’s report catalogued the myriad ways in way American working
people remain under assault. The number of unemployed people increased
by 694,000 in March, reaching 13.2 million. Those on unemployment for
longer than six months reached 3.2 million.
“Almost everyone’s being touched in some way,” said Mark Zandi, chief
economist at Moody’s Economy.com. “It seems like every business in every
industry in every corner of the country has a hiring freeze. They’re
just not in the mood or position to hire. They’re not taking résumés.
They’re not looking for people.”
Manufacturing again led the way down, shedding 161,000 jobs in March.
Employment in construction declined by 126,000, and has fallen by 1.3
million since it peaked in January 2007. Professional and business
services employment fell by 133,000, with more than half the losses in
temporary help services — a sign that companies that have already
shifted from relying on full-time workers to temporary people are
feeling compelled to cut further.
In the suburbs of Atlanta, Meg Fisher, 46, has been looking for work
since she lost her job as a legal secretary in the middle of February.
Her husband’s hours at his pharmacy job were scaled back. All told,
their previous annual income of about $79,000 has been sliced to $20,000.
Ms. Fisher is planning to apply for food stamps, while seeking out
freelance work as a seamstress and knitting instructor.
“It’s not going to replace my salary,” she said. “It’s not even going to
come close, but it’s better than sitting around.”
The report reinforced the reality that the pains of the downturn have
spread far beyond the jobless. The number of those working part time
because their hours have been cut or they are unable to find a full-time
job climbed by 423,000 in March to reach 9 million.
In New Jersey, Henry Perez, 34, and his family are now living in the
basement of his sister’s house and struggling to find work.
A refugee of sorts from the real estate collapse in Las Vegas, where Mr.
Perez once lived and bet big, he has more recently worked in online
commerce and as a marketer at an office furniture company. But after
being laid off at the end of last year, he has found nothing, even as he
has sharply dropped his expectations, applying for jobs at restaurant
chains like Panera Bread and Quizno’s.
“We’re just sitting here all day long looking for jobs on the computer,
frustrated and scared as hell,” Mr. Perez said. “I’m looking for anything.”
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