Job losses' ramifications far-reaching

[babylonsister]

Job losses' ramifications far-reaching
Some expect Fed to cut rates by three-quarters of a point.
By Ron Scherer | Staff writer of The Christian Science Monitor

from the March 10, 2008 edition



New York - The job market, one of the strongest pillars of the US economy, is starting to deteriorate.

Employers in almost all sectors are postponing or canceling plans to hire new workers. If the hiring downturn continues, the ramifications for the economy could be major:

•Many analysts say a paucity of jobs will push America's economy into a recession, if it isn't there already.

•Consumer confidence – running at a low point – could continue to fall as Americans become discouraged about their job prospects.

•The Federal Reserve, which meets March 18 to decide interest-rate policy, will be under pressure for significant rate cuts – perhaps as much as another three-quarters of a percentage point.

"This could be a big turning point in the economy," says Mark Vitner, senior economist at Wachovia Securities in Charlotte, N.C. "It's clear that we are losing momentum, and weakness in the economy is broadening."

The latest indication of weakness in the job market came Friday, when the Labor Department reported that the economy shed 63,000 jobs last month. This follows a loss of 22,000 jobs in January. Although the actual unemployment rate went from 4.9 percent to 4.8 percent, economists say a more telling number is some 644,000 individuals who in January gave up looking for work and dropped out of the labor force altogether.

more...

http://www.csmonitor.com/2008/0310/p01s02-usec.html

[OmahaBlueDog]

1. The Fed is only likely to make this worse...

Lowering interest, in the wake of the current subprime mess, will not itself be likely spur borrowing or stimulate home buying. What it will do is weaken the dollar further. In the long run, this could help our manufacturing sector, but in the short term, all it will do is cause the prices on imported goods (which is damn near everything -- clothing, some food, many cars, much of our fuel) to rise. Rising prices=lower profits/losses=job cuts. Meanwhile, the administration (with the help of our party, I'm sorry to say), ever ready to fiddle while Rome burns, figures that advancing a grand and a half of NEXT YEARS TAX RETURN (which is all they're really doing) will lift us out of this mess. They wouldn't have wanted to do anything useful, like offer low interst refinancing options to families in bad subprime loans, or lowering the soaring deficit.

The way I see it, 2 things need to happen:

1) The next administration needs to make move towards energy independence, and it needs to become a priority as if we were at war for our existence. This is acheivable; vehicles can be run on CNG, ethanol, hybrid-electric power, or batteries. This is technology that exists now and (especially in the cases of ethanol and CNG) require minimal alterations to existing engine technnology. Oil fired plants can be replaced with ng, wind and nuclear technology. If pursued aggressively, this could substantially reduce our current trade imbalance, and reduce our need to make bad foreign policy to obtain oil. It would have an additional benefit of reducing emmissions.

2) Our involvement in Iraq needs to end.

[Warpy]

2. Every lost job has a ripple effect and every Fed cut makes it worse

because all those rate cuts are doing is making everything more expensive. People are cutting back because they have figured out the credit binge is about over. They're having trouble buying necessities after they service their debt every month, and forget about the new TV or the stylish clothing. Increased inflation just makes everything worse, not better, although a rate cut does generally produce a two day sucker rally in the Dow.

As demand for goods and services dries up, so do the jobs that provided them, at least at the retail level. We've got little to lose in the manufacturing sector, thanks to the greed of multinational corporations.

[caledesi]

3. My husband had been unemployed for 6 months and has NOT

received a call from anyone. Sent at least 2 resumes per day. It's bad in FL!

[OmahaBlueDog]

4. If you don't mind my asking

1. What does he do (not specifically, but generally -- insurance, construction, teaching, etc.)?
2. What part of Florida (Gold Coast, Treasure Coast, SPace Coast, West Coast, Panhandle, Central)?

[caledesi]

5. He does inventory....filing etc. He is a college grad but

has refused to be any "supervisor"...over 50 and worked for Citigroup for almost 20 years. He has had 4 temp jobs in the past 2 yrs after Citigroup had major layoffs.

We live in Tampa (Gulf Coast).

As an aside, 6 mons. after the big layoff I got MS and am now disabled. Had to give up a job I loved(Web sit developer for the legal community...worked at home). Sad...are you crying yet? LOL!

[Mojorabbit]

6. Caledesi

Sending you a big hug. I had to give up nursing years ago which I loved when I came down with MS.

[caledesi]

7. Txs MR...I am still standing...well kind of....NT

[OmahaBlueDog]

9. I Rode in the Central Florida MS 150 in '05 and '06

Busch Gardens, Tampa to Sea World, Orlando (they've subsequently changed the route because the pu....er, I mean sissies didn't like riding on Deen Still Road). I raised over $3,000 in those rides, so hopefully you got some help out of it.

That's tough on your husband, I'm sure. If he were in Orlando, I might have suggested he check out some of the insurance offices there (St. Paul/Travelers has a big operation there).

We used to live outside Ft. Lauderdale, and my wife was laid of after 9/11. She went and filed for unemployment, but was pretty quickly able to find another secretarial gig. But, to this day, she kicks herself for not, instead, trying to take advantage of some of the state sponsored job training/retraining for the unemployed.

[backscatter712]

8. I've still got a decent job, for now...

I'm pretty fortunate, in that I'm a software engineer that's finally racked up enough experience to be in demand.

My current employer is probably the best employer I've ever had, but it is a VC-funded startup, which makes the business a bit of a roller coaster ride.

We've had a couple people, one of them really high up on the totem pole, leave recently, and we've had a few quarters of less-than-stellar revenue.

If this keeps up, I wouldn't be surprised to be laid off with little notice.

On the bright side, I'm being courted by some recruiters, so I have a plan B in the works. I also have a little savings, which should get me by for a few months of unemployment...

[AdHocSolver]

10. There is ONLY ONE solution to the U.S. economic problems: bring manufacturing JOBS BACK to the U.S.

The fact that we import almost everything that we use into this country is THE reason the economy is tanking. Importing almost all of the "everyday" goods we use means that we have to buy everything on credit. The entire country is acting like the family with little income who buys way more than they can afford by running up a huge amount of credit card debt.

That is the reason the value of the dollar is decreasing and we are seeing inflation increase. A severe imbalance of trade is the main cause of inflation. The severity of the federal deficit is due in part because there is large scale unemployment in the U.S. and wages have not kept up with inflation. This causes a severe shortfall in income taxes. Unemployed people pay no income taxes (unless they are millionaire investors), and low wage workers pay relatively little taxes.

There is NO "free trade" in this country outside of flea markets and rummage sales. NAFTA, the WTO, the IMF, the World Bank, and all the other trade and financial agreements are NOT free trade. They are trade agreements designed by, and for, the exclusive benefit of the multinational corporations. They are designed to enforce cartel agreements just as OPEC is designed to control world oil prices for the benefit of the oil companies and the Arab sheiks of the Middle East.

The solution, the ONLY solution, for the U.S. is to rescind all of these cartel agreements and impose import restrictions and customs duties on all products that are imported which could be manufactured here. That includes clothes, shoes, toys, electronics, cars and car parts, tools, machinery, medical products, and so on. The cost to Americans will NOT go up significantly since the corporations do NOT pass along labor cost savings to you the consumers, but merely pocket the difference as profits. At the same time, the huge debt burden caused by the trade deficits is making your money worth less and increasing prices anyway.

Reducing the interest rates will not help Americans. Its purpose is to increase the spread between what the banks pay their depositors and what they charge their customers who borrow money. In other words, it is designed to increase the profits of the banks. Lowering interest rates leads to increases in the money supply and fuels inflation. The banks win and you lose.

As for the job market, the unemployment figures put out by the government are a joke. They understate unemployment by a huge amount. They do not count people who have run out of unemployment compensation, even if they haven't found work. You use up your unemployment and you are now considered "employed". They don't count people as unemployed who have taken a part-time job. If you work two part-time minimum wage jobs, that is counted as two jobs.

There are many more fallacies and misinformation about economics in the media and often seen here on DU. It is difficult to combat the enemy when so few people understand what the war is about. The last seven years of Bush/Cheney governance becomes understandable when you consider them to be corporate executives running the U.S. in the same way that Ken Lay ran Enron, and for the same purpose.

It is not rocket science. People assume it is much too complicated to understand what is going on without a Ph.D. in Economics. Nothing could be further from the truth. If you can't understand what the executives and the pundits are saying, you can safely assume that it is meaningless obfuscation. They are not out to educate you. Their goal is to confuse you so that they can rip you off.

[ticktockman]

11. No jobs in 11 months according to Household Survey

The latest indication of weakness in the job market came Friday, when the Labor Department reported that the economy shed 63,000 jobs last month. This follows a loss of 22,000 jobs in January. Although the actual unemployment rate went from 4.9 percent to 4.8 percent, economists say a more telling number is some 644,000 individuals who in January gave up looking for work and dropped out of the labor force altogether.

According to the Payroll Survey, no jobs have been created in the past 3 months. According to the Household Survey, however, no jobs have been created in the past 11 months! This can be seen in the following graph which shows the Household Survey in purple and the Payroll Survey in blue:



The actual numbers and sources are at http://home.att.net/~rdavis2/employ08.html and a further discussion of the differences between the two surveys is at http://usbudget.blogspot.com/2008/03/employment-from-bls-household-and.html .