By LOUIS UCHITELLE Published: January 9, 2009 The nation lost 524,000 jobs in De
ID: 1240522 • Letter: B
Question
Published: January 9, 2009
The nation lost 524,000 jobs in December, reflecting a pervasivefear among employers that if they fail to shed workers quicklytheir companies may go under in a recession poised to become theworst since the 1930s.
The unemployment rate, meanwhile, jumped to a 16-year-high of7.2 percent, the Bureauof Labor Statistics reported on Friday. The growing army of theunemployed, at 11.1 million, is nearly 50 percent bigger than atthe start of the recession a year ago.
Responding to the report, President-elect Barack Obama saidCongress must enact an economic stimulus planquickly.
The December decline in jobs came on top of similar losses inOctober and November. Not since 1980 has the work force shrunk somuch in just three months. Companies across all industries aregrappling with sales that are deteriorating rapidly just as theylose easy access to loans.
“The simplest way for a company to hoard cash is to draintheir inventories and fire their workers,” said Robert J.Barbera, chief economist at the InvestmentTechnology Group, a research and trading firm, “andeverywhere you look, that is what is happening.”
The total number of jobs lost in the recession now totals 2.59million, counting upward revisions for October and November, withmany more job losses expected in coming months.
Nearly as troubling, hundreds of thousands more people soughtfull-time work in December but could not get more than part-timejobs.
If those workers are included, the so-called total unemploymentrate swelled to 13.5 percent, from 12.6 percent in November andjust 8.7 percent at the start of the recession. Total unemploymentincludes the officially unemployed, the part-timers who seek morehours and the nearly 300,000 who would like a job but tellpollsters from the Bureau of Labor Statistics that they are toodiscouraged to look.
Employers in nearly every industry cut payrolls. Only healthcare and education bucked the trend in December, adding just 45,000jobs combined, the Bureau of Labor Statistics reported.Manufacturers, construction companies and retailers led all lastyear in eliminating jobs, and they did so again in December.
“What happened to jobs in the fourth quarter tells usunmistakably that this recession is going to be a long one and adeep one,” Mr. Barbera said. “The toughest sixmonths,” he added, “will be the just-completed fourthquarter and the first quarter of this year.”
The consensus view of economists surveyed by Blue Chip EconomicIndicators is that the economy will continue to contract until Julyat the very least, but at a slowing pace in the second quarter.That would make it the longest recession since the 1930s,outlasting the two record-holders, the mid-1970s and early 1980sdownturns. Each of these recessions lasted 16 months. The currentrecession, which started in December 2007, would reach thatmilestone in April.
At a news conference in Washington, Mr. Obama said that behindthe latest job statistics were “real lives, real suffering,real fears,” and Congress must bring Americans relief byquickly enacting a stimulus plan. Asked whether he was worried thatsome lawmakers thought his proposed stimulus program, estimated at$775 billion, was too small, he responded that others thought itwas too big and said he was open to a “whole host ofideas” in consultation with Congress.
“You are assuming that I expected it to be easy,” hetold one questioner. “No.”
The latest jobs report suggested that many employers tried tocut back hours before resorting to job cuts or hiring freezes. Theaverage number of hours that Americans worked fell to 33.3 a weekin December, down two-tenths of an hour, to the lowest level sincerecords first were kept in 1964. Over the course of the recession,average weekly hours worked are down 4 percent.
“There has been a change in psychology as the financialcrisis has devolved into a panic,” said Mark Zandi, chiefeconomist at Moody’sEconomy.com.“Businesses have gone from trying to hold onto workers, byreducing their hours, to laying them off in an effort tosurvive.”
Economists fell over themselves in describing the dire nature ofthe jobs report, which they said was alarming confirmation that theeconomy was in the midst of a sharp contraction in which consumerspending and business investment bordered on free fall. Many saythat the economy contracted in the fourth quarter at a 5 or 6percent annual rate and that steep contraction will continue atleast through the first quarter, letting up only if Congressapproves a sizable stimulus, one that kicks in soon and is at leastas big as the $775 billion that the Obama camp has proposed.
“It will add massively to the budget deficit,” saidStuart G. Hoffman, chief economist at the PNCFinancial Services Group in Pittsburgh, who counts himself asan advocate of balanced budgets. “But I am not againstrunning deficits in these circumstances, not with so many peoplelosing their jobs.”
Mr. Hoffman expects the unemployment rate, which jumped to 7.2percent last month from 6.8 percent in November, to rise to 8.5percent by July and plateau there for the rest of the year.
Others are less sanguine. They see 9 or 10 percent unemploymentby early next year, and a jobless recovery that continues for aboutsix months even after the economy ceases to contract.
By comparison, the unemployment rate reached 10.8 percent in the1981-1982 recession, its highest level since World War II. In thoseyears, unemployment and economic growth rose and fell more or lessin tandem. But in the early 1990s that changed. In the 1990-1991recession and again after the 2001 recession, employers continuedto shed jobs for months. In the case of the 2001 recession,employment did not return to its prerecession level for fouryears.
“Even with the help of a stimulus,” said David A.Levy, chairman of the Jerome Levy Forecasting Center, “theunemployment rate is going to keep rising for the rest of the year,or longer.”
Jeff Zeleny contributed reporting.
Explanation / Answer
(The nation lost 524,000 jobs in December The unemployment rate, meanwhile, jumped to a 16-year-high of7.2 percent The growing army of the unemployed, at 11.1 million, is nearly50 percent bigger than at the start of the recession a year ago.)These are reasons Barack Obama wishes to enact an economic stimulusplan quickly You could continue your summary by providing reasons as to whyunemployment rates are so high right now. Robert Barbera providesan explanation: (“The simplest way for a company to hoard cash is todrain their inventories and fire their workers,” said RobertJ. Barbera.Employers in nearly every industry cut payrolls. Onlyhealth care and education bucked the trend in December, adding just45,000 jobs combined, the Bureau of Labor Statistics reported.Manufacturers, construction companies and retailers led all lastyear in eliminating jobs, and they did so again inDecember.) These statement explains why unemploymentrates are so high currently. You can include these quotes in yoursummary but shorten them a bit. You can end your summary by providing what the experts say liein the horizon for unemployment rates here are some ofthem: Mr. Hoffman expects the unemployment rate, which jumped to 7.2percent last month from 6.8 percent in November, to rise to 8.5percent by July and plateau there for the rest of the year. Others are less sanguine. They see 9 or 10 percentunemployment by early next year, and a jobless recovery thatcontinues for about six months even after the economy ceases tocontract. Good Luck!Related Questions
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