'Jobless recovery' in South forecast

CHARLESTON, W.VA.--A Federal Reserve official told Southern governors Tuesday to expect economic growth paired with lagging employment in the region over the next year.

"The economy is recovering, but as you know, it's a jobless recovery," said Federal Reserve Bank of Richmond President J. Alfred Broaddus Jr.

Addressing a panel session at the 69th annual meeting of the Southern Governors' Association, Broaddus outlined his and other forecasts that predict the region's economy will grow by 4.5 percent over the next year.

He called the consensus forecast "quite plausible" and "sensible." But even if true, Broaddus said, the unemployment rate will likely decline from its current 6.1 percent level to only 5.75 percent by the end of next year.

"We would still have slack in the labor markets," Broaddus said. "A weaker performance cannot be ruled out if the job market remains soft." Broaddus blamed the bleak employment picture on greater worker productivity, which in itself is important for the nation's financial health.

He added that consumer spending must continue to improve and should be boosted by the latest round of tax cuts. He similarly said business leaders must be "a little less skeptical and a little less cautious." "It is important that they would begin to make investments based on a brighter picture" as offered by the forecasts, he said.

Broaddus said the Federal Reserve system can deal with a slowdown in price increases, calling the risk "quite small." The annual inflation rate, meanwhile, remains at a manageable 1.5 percent.

"The challenge now is to hold it in this neighborhood," Broaddus said during a question-and-answer session following his speech. "That will provide a solid foundation for that which we care very much about, and this is improvement of the job market." While declining to comment on the dollar's health, Broaddus said the improving U.S. economy is one of only a few bright spots globally.

"The world economy has been weak," he said. "We need to see a better performance internationally." Broaddus also discounted the short-term effect of record federal deficits.

"I don't believe that that development itself is going to retard the recovery that we are expecting," he said. "A deficit is not, itself, a huge or immediate problem." Broaddus' district covers Maryland, Virginia, the Carolinas, Washington, D.C., and most of West Virginia.

He is also a member of the influential Federal Open Market Committee, which voted Sept. 16 to keep a key short-term interest rate at a 45-year low of 1 percent.

Jack Guynn, an FOMC member and Broaddus' counterpart overseeing the Atlanta-based district, said Monday in Florida that job loss is becoming concentrated in fewer sectors, primarily manufacturing.

This year's SGA meeting is the first to be held in West Virginia's capital in the group's history. The SGA encompasses the Southeast as well as Puerto Rico and the U.S. Virgin Islands.

West Virginia Gov. Bob Wise has been the SGA's chairman, another first for the Mountain State. Wise handed over the SGA reins at the summit's conclusion Tuesday to Virginia Gov. Mark R. Warner.

I agree, jobless or jobLOSS recovery is not a recovery at all.
Lou Dobbs has recently run a segment Exporting America; last night he focused on the city of Buffalo. Here's the segment from yesterday's transcript:
http://www.cnn.com/TRANSCRIPTS/0309/23/ldt.00.html

DOBBS: CEOs, business consultants and economists would like you to believe this country is exporting only manufacturing jobs. But the reality is far different. Millions of white-collar jobs as well are being exported overseas. And many communities in this country are paying a terrible price.

One such community is Buffalo, New York. It's a city that's already been hit with a loss of 25,000 steel jobs because of foreign competition. The pain goes far beyond the steel industry.

Jan Hopkins reports in our special report, "Exporting America."

(BEGIN VIDEOTAPE)

JAN HOPKINS, CNN CORRESPONDENT (voice-over): Mike Hall is looking for a job. He worked for a call center with Sprint as a major client.

MICHAEL HALL, FORMER CALL CENTER WORKER: The call center in Buffalo had over 800 employees. And the call center was closed. And the work basically went to India, Puerto Rico and Mexico.

HOPKINS: Barry Waldman's call center handled Microsoft's technical assistance. Waldman also lost his job. BARRY WALDMAN, FORMER CALL CENTER WORKER: It's very difficult, especially in the computer industry, to bring in someone that has the technical skill or at least the knowledge of the product at $7 or $8 an hour in America, when you can get that -- they will line up for that in India.

HOPKINS: At the Buffalo job center, they're lining up for paying jobs.

COLLEEN CUMMINGS, BUFFALO EMPLOYMENT AND TRAINING CENTER: We do also have to help them get beyond that disappointment, and sometimes anger, that they weren't doing anything wrong. They were doing their jobs. They were doing them well. And the company, making business decisions, has chosen to go elsewhere.

HOPKINS: Consultants like Buffalo-based Peter Bloom are working with call centers, helping them cut costs, and showing them that there are cheaper options in other countries.

PETER BLOOM, CALL CENTER CONSULTANT: The actual pay is probably one-tenth in India or the Philippines as to what it is in the United States.

UNIDENTIFIED FEMALE: This is Debbie (ph). How may I help you?

HOPKINS: This BlueCross BlueShield call center in Buffalo is trying to you cut costs without cutting jobs. So far, it's worked, because customers like speaking to someone local.

PAULINE CATALDI, BLUECROSS BLUESHIELD OF WESTERN NEW YORK: When they call, it's like they're talking to their sister or their cousin. And there's a great sensitivity there. There's a lot of empathy there.

HOPKINS: That personal touch is often not enough for a company worried about the bottom line. Federal Reserve economists say these jobs aren't going to come back when the economy does.

RICHARD DEITZ, FEDERAL RESERVE BANK OF NEW YORK: During this recession, we have seen a lot of change in employment that's been more structural, rather than cyclical. So a lot of the losses are going to be permanent.

HOPKINS: The workers left behind, like engineer Ken Thrum, are trying to figure out what to do.

KENNETH THRUM, JOB SEARCHER: I've done everything anybody has asked me, have been successful at it, never been fired from a job. But yet this is the second time it's hit me. And, unfortunately, it's hit me at a time in this history in this country that it's going to be tough for people like myself and for anybody who is trying to look for a job, a good-paying job.

(END VIDEOTAPE)

HOPKINS: Workers like Ken Thrum understand that we live in a global economy, but he's forced to figure out yet again where he fits in. As for Buffalo, the city is in such bad shape financially that the governor of New York has named a financial control board to take over -- Lou.

DOBBS: And as terrible as the individual stories, almost as chilling is to hear the Federal Reserve say these job losses are permanent. It's just despicable.

HOPKINS: It's not cyclical.

DOBBS: The lack of a trade policy here.

HOPKINS: Right.

DOBBS: Jan, thanks -- Jan Hopkins.

The automobile industry is another example of how U.S. trade policy, or the lack of one, is hurting American workers. The United States is now running a huge trade deficit in cars and car parts. You might expect that, with countries such as Germany and Japan, that deficit to be huge. But there is also a deficit with Mexico, with Brazil and Taiwan.

Peter Viles reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: How do you beat George Bush?

PETER VILES, CNN CORRESPONDENT (voice-over): A telling exchange in the Democratic presidential campaign, Howard Dean wants to link foreign trade to labor and environmental policy. But John Kerry, defending the U.S. auto industry, says, wait a minute. That would prevent Detroit from selling cars in the -- quote -- "developing world." That's a nice thought, but why isn't anybody worried about selling cars in the United States?

It is best market in the world. And last month, Toyota outsold Chrysler in the U.S. to become the third biggest player in the market. Look at the numbers. Forget developing markets. America is giving away its own market. Through July, the U.S. ran a $72 billion trade deficit in autos and auto parts. The U.S. runs huge deficits with Japan, Germany, and Canada. No surprise. But we also run huge deficits with Mexico, $15 billion through July, Brazil and Taiwan.

And China is on the rise as a factory for auto parts bound for elsewhere in the world.

(END VIDEOTAPE)

VILES: Late today, a dramatic example of how these trends turn into lost jobs in America: DaimlerChrysler announcing it will not build a planned factory near Savannah, Georgia. Georgia officials had hoped that that plant would create thousands of jobs, the German company blaming a -- quote -- "difficult auto market." One of the difficulties is $15 billion of Mexican goods, auto goods, coming into this market.

DOBBS: It's extraordinary. And as we try to tally up the job losses here, it becomes all but impossible. The U.S. Commerce Department does not keep a record of these job losses, nor the balance and the effect of these deals that are created, with U.S. companies building cars overseas and foreign makers building them here.

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