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1 Job Losses on Thu Oct 01, 2009 6:10 pm



Weak employment market likely to outlast pickup in spending

Paul Sancya / APPeople filling out out applications for positions at a new bar and restaurant in Detroit. Until job losses reverse, the recovery likely will be tepid.
John W. SchoenSenior producerProfileEmail
updated 12:26 p.m. PT, Thurs., Oct. 1, 2009

There were some hopeful signs among the blizzard of economic data released this week. But the recovery from the worst downturn in decades remains hostage to one of the ugliest numbers on the list: the unemployment rate.

"The hole that has been blown in the labor market is absolutely enormous,” said Heidi Shierholz, an economist with the Economic Policy Institute.

That hole continues to widen. On Thursday, the Labor Department said initial claims for unemployment insurance rose to a seasonally adjusted 551,000 — up from 534,000 in the previous week and more than Wall Street economists expected.

The data followed a report Wednesday from payroll manager ADP showing that U.S. companies cut 254,000 jobs in September, also more than forecast. Government figures for September, including the official unemployment rate, will be released Friday morning.

The bad news on the job front has been partially offset by other signs that the economy may be on the mend. A private trade group said Thursday that manufacturing expanded for the second straight month in September, but at a slightly slower pace than in August and not as robustly as economists predicted. Construction spending also rose a bit in August.

And consumer spending, which accounts for 70 percent of total economic activity, jumped in August by the largest amount in nearly eight years, even though personal incomes continued to lag. Housing sales have also perked up this summer; pending sales of existing homes rose 6.4 percent in August.

But consumer spending and home buying have gotten a big boost from government programs like the hugely popular Cash for Clunkers car buying subsidies, which has expired, and the $8,000 first-time home buyer tax credit, which expires at the end of next month.

Indeed, auto sales at Ford and Chrysler dropped in September, showing that automakers were likely to have a tough time luring buyers into showrooms now that the clunkers program has ended.

Consumers may not be able to continue to boost spending without government subsidies — especially the nearly 7 million workers who have lost their jobs since the worst economic downturn since the Great Depression began in December 2007.

Even if the economy were to rebound sharply, the job market would have to create 400,000 jobs a month, every month, for two years to put those people back to work. Economists and government officials, including Federal Reserve Chairman Ben Bernanke, warn that the recovery will likely be very weak.

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"Even though from a technical perspective the recession is very likely over at this point,” he said last month, “it's still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was.”

That view was echoed Wednesday by the chairman of Wal-Mart Stores Inc., who warned that the global economic recovery likely will be lethargic. The world's biggest retailer is betting on stronger growth potential in China and India.

"The world recovery is going to be led by Asia, although it's going to be very challenging. I think this recovery is going to be a slow one," Robson Walton told a global CEO business conference in Kuala Lampur, Malaysia. Walton, the eldest son of Wal-Mart founder Sam Walton, said "sales have been tough," even though the retailer was benefiting from the economic downturn as more people shop at discounters for bargains.
Battered household savings

Walton’s comments echoed remarks Tuesday in Singapore by General Electric chief executive Jeffrey Immelt, who warned that high unemployment and slower lending will drag on U.S. economic growth, likely resulting in the weakest recovery in decades. ( is a joint venture of Microsoft and GE’s NBC Universal unit.)

The recovery is also being dampened by an ongoing downturn in the commercial real estate market.

“Commercial real estate remains a very serious problem,” Bernanke told Congress Thursday. “We are concerned both because the fundamentals are weakening and because the financing situation is bad. That could provide a source of a lot of stress, particularly for small and regional banks that have a very heavy concentration in commercial real estate.”

The expected pickup in growth in the second half of the year is the result, in part, of companies rebuilding inventories that were cut sharply during the deepest trough of the recession. But overall demand may not rise soon to pre-recession levels.

So far, employers aren’t seeing much of a pop in demand, according to employment consultant Challenger, Challenger, Gray & Christmas, which surveys companies on layoffs plans.

“Declining demand is still the dominant reason (for layoffs),” said Rick Cobb, the company’s executive vice president. “It’s far and away above any of the other reasons given.”

High unemployment has placed a major drag on consumer spending; so has the beating households have taken on their savings and the drop in the value of their homes. Despite recent gains in the stock market, U.S. households have lost roughly $12 trillion in net worth since the recession began, according to the Federal Reserve’s flow of funds data.

“So cash that people do have — they're putting toward rebuilding their savings rather than spending,” said Shierholz. “It is going to be a long haul until we get consumer spending back up.”

With consumers tapped out, Uncle Sam has become the spender of last resort. As the $787 billion worth of tax cuts and spending projects works through the system, that money has helped move some of the key economic data into positive territory. But that impact will fade as government spending dries up.

That budget squeeze is already playing out at all but a handful of state and local governments. As state and local budgets are cut, spending falls, creating more layoffs. Unlike Congress, states and local governments can't borrow money to close budget gaps.

2 Re: Job Losses on Fri Oct 02, 2009 12:16 am


My-My..where is all this stimulus help ?? The thousands of jobs promised ? Seems the hallelujah trail the anointed one promised leads to no where. As he jets off in the 747 and the Mrs. took the 727..AT TAX PAYER EXPENSE...Off hustling for the damn Olympics in the corruption infested windy city..Only 47 city officals have come under investigation over the last few years , lovely place to showcase this country by..and by all means take Oprah with them..AT TAX PAYERS EXPENSE.

3 Re: Job Losses on Fri Oct 02, 2009 2:20 am


SSC wrote:My-My..where is all this stimulus help ?? The thousands of jobs promised ? Seems the hallelujah trail the anointed one promised leads to no where. As he jets off in the 747 and the Mrs. took the 727..AT TAX PAYER EXPENSE...Off hustling for the damn Olympics in the corruption infested windy city..Only 47 city officals have come under investigation over the last few years , lovely place to showcase this country by..and by all means take Oprah with them..AT TAX PAYERS EXPENSE.
This is not news,but comment on this news. I clearly remember Obama and crew urging immediate passage of the stimulus bill with one of the objectives being the cap of 8% unemployment. No-one with a brain believed that goal could be held,but the lie was repeated over and over. The caveat "recovery will take time" was also but the 8% figure was never retracted, UNTIL the stimulus bill was passed. THEN we heard about an "extended period of employment recovery". Oh REALLY??? We hear the typical Bush-bash, "Bush started this with TARP". Well, TARP has been an unquestioned success. The banks didn't faill nationwide and some banks are actually paying money back. As I opined long ago, the stimulus bill was not intended to stimulate anything but A). Debt that would enslave the taxpayer for decades, and B) A huge Democratic slush fund meant to reward contractors/vendors in targeted areas. One may disagree with that view,but I would submit that the actual facts and history of the last 8 months certainly don't refute my arguments whether or not one believes those facts support my views.

4 Re: Job Losses on Fri Oct 02, 2009 10:03 pm


9.8% were the numbers out today on unemployment and part-time unemployment is much for the propaganda of 8%..551.000 new claims last month..and this is recovery ???

5 Re: Job Losses on Fri Oct 02, 2009 10:08 pm


it took years to cause this collapse,it will take more than nine months to repair,at least this president is trying~~

6 Re: Job Losses on Fri Oct 02, 2009 10:15 pm


Trying to do what ??? Bankrupt the country, or cause such a division it will never be corrected. Obama has showed one thing , he will spend money, maybe it is China's or Japan since they pretty well own us now, what is 30 + years of trillion+ dollars of debt, nothing to him, he will be out in 4..long before the lasting affects of his uncontrolled spending spree even becomes evident.

7 Re: Job Losses on Fri Oct 02, 2009 11:03 pm


That was already done by the past administration~ a full plate Obama inherited,now he is trying to repair, I think he will but maybe not the first term, if he doesn't get second term who ever does then maybe the healing will be carried on`

8 Re: Job Losses on Sat Oct 03, 2009 3:08 am


Everyone knows there were problems that isn't even a debatable issue. The issue at hand now is the mass amount of debt Obama keeps chalking up, trillions and he hasn't been there a year yet. You think his plate is full, no more so than any other Prez going into office.He's not special..nor is he the messiah or a saviour. With his numbers dropping like rocks he is losing control. Poor decisions , lies on top of lies ..he sold a cheap bill of goods during the campaign and now backs up on his word. He is becoming an embarrassment.

9 Re: Job Losses on Sat Oct 03, 2009 9:19 am


which he inherited most of that debt.

sometimes you have to spend money, to make money~the American people basically thinks he is still doing a good job, but you will always have your whiners, an ones who don't want to see him(Obama) succeed, wonder why?
Of Course The Grand Old Party doesn't want him to succeed~ or it looks that way..

10 Re: Job Losses on Sat Oct 03, 2009 8:51 pm


Obama has a 50% approval rate, that means only half of the people approve of the way he is doing his job, ...2/3rds of the American people want the military heads to call the shots on the war not Obama, they have no faith in his handling it...

11 Re: Job Losses on Sat Oct 03, 2009 9:24 pm


it will come back~Approval !` I believe, still a fair approval rating with what is been left him to fix~ I hope he succeeds, not just for a smirky reason, but because our Country needs it, an the people who are hurting needs it~

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