Posted on 01/10/2003 11:38:31 PM PST by sarcasm
he nation continued to bleed tens of thousands of jobs in December, the Labor Department reported yesterday, jolting forecasters who had expected a modest upturn in employment and suggesting that American business remains highly pessimistic about the economic future.
Payrolls in nonfarm businesses, adjusted to account for normal seasonal variations, dropped by 101,000, and the unemployment rate stayed at 6 percent. The Labor Department also revised the number of jobs lost in November to 88,000 from 40,000.
Though cornerstones of economic growth — like increasing productivity and financial stability — remain intact, companies have been unwilling to expand production or commit themselves to investments in new equipment that would support job creation. Retail spending and corporate profits have edged upward slightly, but a rush of new jobs still seems a long way off.
Elaine L. Chao, the secretary of labor, said that higher earnings would have to come first. "The profit picture is not that strong, so that is not an encouragement to business owners to engage in permanent hiring," she said. "Employers are relying on overtime and short-term help."
Analysts said the disappointing job figures were sure to turn up the heat under the debate in Congress about the best way to stimulate growth in the lagging economy.
In a speech delivered after the Labor Department released its report, Vice President Dick Cheney lashed out at critics of the administration's $674 billion tax cut plan, saying that the White House's "jobs and growth" package would not only revive the economy but ultimately cut the budget deficit. [Page A12.]
Prominent Democrats, however, said the plan would do little to overcome the severe inertia in the labor market.
"Most economists agree that the Bush plan is not a stimulus plan at all and will not have any real immediate impact on the economy," Nancy Pelosi, the House Democratic leader, said. "When is President Bush going to realize that job creation needs to be his top priority?"
The roots of the problem may be too ephemeral to attack directly, however. According to business leaders and analysts, deep feelings of uncertainty among corporate executives and consumers alike are holding back an economic resurgence.
"The cycle itself has been of such a different nature — what C.E.O.'s would complain of as a lack of visibility — that they don't have a clear mental model of how things might move forward," said Bill Martin, chief economist at UBS Global Asset Management.
Prospects for growth are also being hurt, said Christopher J. Wolfe, United States equity strategist for J. P. Morgan Private Bank, as companies that overextended themselves in the last boom sell assets to pay off debt. Despite low interest rates, Mr. Martin added, many companies worry that taking on more debt to finance investment could lead to worse credit ratings, or even bankruptcy.
The concerns would not be so great, except that businesses are hesitant to rely on further growth in consumers' willingness to spend. Bruised portfolios, terrorism and the risks associated with a war in Iraq are finally taking their toll, said John J. Castellani, president of the Business Roundtable, an association of top corporate executives.
"The issue has not been the cost of capital," he said. "The issue has been demand for the products and the services."
On Wednesday, the Federal Reserve reported that consumer credit had dropped for the first time in four years. The decline of $2.2 billion was the biggest since October 1991.
"We are starting to see more adjustment by the consumer," Mr. Martin said, citing rising savings rates as a threat to demand in the short term. The continuing hemorrhage of jobs could add to consumers' fears, he said.
Manufacturers of long-lasting goods made more heavy cuts last month, with 46,000 positions eliminated. Even if the economy returns to strong growth, those jobs may not return. "All the jobs that have been lost in the United States in manufacturing have essentially been recreated in China," Mr. Wolfe said.
Restaurants and bars cut 63,000 jobs on a seasonally adjusted basis, signifying a holiday season of muted celebrations — at least in comparison with those of the recent past.
Unemployment among teenagers fell slightly, to 16.1 percent from 16.8 percent, but joblessness among black workers grew to 11.5 percent, from 11 percent, the highest rate since May 1994. For the average American worker, wages and hours of work per week changed little in December.
In the last two years, the government tried to help the economy mainly by propping up consumers through lower interest rates and cuts in income taxes. On Tuesday, the president proposed a further package of tax cuts worth $674 billion over 10 years, but it is unclear how much consumers' spending would respond to its biggest component, the abolition of the tax on dividends.
"It is exceedingly difficult to parse," Mr. Wolfe said. "We're struggling with the net effect on consumption." His team has estimated that spending may rise by at most $30 billion as a result of the change, he said, "and it's probably a lot less than that, at least in the short run."
Some economists gave the Democratic plan, announced on Monday, a better reception. It would inject $136 billion into the economy, mainly through aid to the states and through tax rebates that can affect spending quickly.
"I agree with the Democratic plan much more than the president's," said William C. Dudley, chief United States economist at Goldman, Sachs. "But I would make the Democratic plan a little bigger and extend it into 2004."
Other experts did see some potential for job creation from ending the taxation of dividends. Tracy G. Herrick, chief investment strategist at Jefferies & Company, an investment bank, said that some of the extra cash would flow to well-off small-business owners through their own portfolios. "Small businesses tend to be not investment-intensive," Mr. Herrick said. "They tend to be more people-intensive. The orders come from big companies, and jobs are created by the little companies."
So far, however, the job market has offered little relief to people like Terry Gilliam, who had worked in the hotel industry in Philadelphia and has been looking for a job since July 2001. She is not eligible for the latest extension of unemployment benefits, signed this week by President Bush, because her original benefits ran out in September. About one million Americans are in the same predicament, according to the Center on Budget and Policy Priorities, a liberal research group in Washington.
"I've been working over 20-something years and having that money taken out of my check," Ms. Gilliam said. "The unemployment fund has billions of dollars in it for this purpose. I don't understand it."
Ms. Gilliam, who said that she had heard about the re-employment accounts that President Bush proposed to reward people looking for new jobs, said that she was already doing everything she could to find work. The number of jobless who have been looking for work for more than six months rose for the fourth month in a row, to 1,856,000 — the highest level since February 1993.
"I'm looking for anything that I can apply my skills and knowledge to," Ms. Gilliam said from her home in Philadelphia, having returned hours earlier from a job interview. "If I get $3,000, I'll be using it to eat and pay my gas, electric, phone and rent."
Experiences like Ms. Gilliam's notwithstanding, at least one forecaster saw the report on employment in a more positive light.
"Most of the weakness is where we would have expected it, and it's not broadly based," Mr. Herrick, the Jefferies & Company strategist, said. "Things are right on schedule for moderate growth of 3 percent or 3.5 percent for the year as a whole, which wouldn't be that bad at all."
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That's part of it and you haven't seen anything yet.
Really? Good. About 25% of the people I see should be sucking on pebbles to fight hunger pains. There are so many fat, stupid, lazy paper shuffling, "How do I do an e-mail attachment of my dogs picture?" oxygen thieve that believe their employer owes them a total stress free, Zen state, self- esteem fulfillment experience
Furthermore, none of these types learn anything. Poor me, I got the boot. So, they stumble around for a year and then some desperate sap hires them. You know what they talk about the first six months? How poor them, they shuffled without work and had to cut down on delivery of fatty Chinese chicken wings and couldn’t take little 180 lbs, 10 year old Timmy to Disney and he had to play Nintendo in the house all summer.
The horror, the horror of life in America.
LOL........so true!
If there are no real solutions until the situation is extreme, and affecting everyone, those solutions will be extreme. Close the border with Mexico. Jail and fine employers who knowingly hire illegals, or lie about the need for H1B Visa employees. Rescind permission for legals to be here if their jobs can be filled by qualified US citizens. Cut down on the size of the government and connect that with lower taxes.
The GWB seems to be buying the theory that a less-taxed corporate/rich US will improve the situation. They'll just send jobs overseas to increase their bottom line to increase dividends for their large stockholders (middle class, yuh, sure). Instead, it's new businesses that should get breaks. The history of US economic growth is innovation. Too many of todays potential innovators are waiting tables to survive. Look at history. Any civilization that flourished had a large segment of people who had the health, food, education, and time to innovate.
Unfortunately, they're running the economy and the government.
Seriously, for everyone in that catetory there is some college graduate over the past few years who can't get a good job in his/her field, or pay off those loans. There are retirees living on a fixed income who see their CD interest rates down at least 50% when renewal comes up (from 6% to 4%, if they're lucky). There are decent family people with young kids and mortgages who are seeing jobs dry up.
There are lazy people, of course. There are people doing very well, of course. But, there are also a lot of decent people who see their way of life and economic security evaporating. And, many are able to see that as we lose our sovereignty and independence, the spiral is downward.
Half of the graduates have degrees in useless( save to give professors jobs ) degrees. Furthermore, many have been, more or less, hanging out at the equivilent of high schools avoiding the real world. Alot stay with these attitudes their entire life.
" ...There are retirees living on a fixed income..."
And why and who is responsible for this? If you are not working, or don't have your money out on the street taking risks, why should your income be anything but fixed?
".. who see their CD interest rates down at least 50% when renewal comes up (from 6% to 4%, if they're lucky)..."
Non to low or no risk investments are almost always returned at or near the inflation rate. No risk, no profit.
".. There are decent family people with young kids and mortgages who are seeing jobs dry up."
Move to the jobs. Even the origional Indians were moving. Our whole nation was founded upon movement. The WW II " Job for life " economy has been dead for over twenty years, save standing around in a town, county or government offices.
The article said MILLIONS, NOT "hundreds of thousands".
I can see why the democrats want unemployments, since they were able to capitalize on it for decades after the Great Depression. They also want lots of immigrants coming in who vote democrat.
Lots of unemployment and lots of new immigrants will help the democrats win the next election, much more so than it helped clinton win in 1992.
Why any republican would want americans out of work, and tens of millions of immigrants coming in to take whatever remaining jobs, is soemthing new, and a puzzle. Traditionally, republicans used to be good for the economy, and for creating american jobs for americans.
Long term, Bush's policy of trying to give citizenship to illegals, to keep the flood of legal immigrants coming in at a steady high rate, and to keep letting in millions in from the H1-B visa program which prevents American engineers and American computer people from getting jobs, is disastrous.
Unless the economy turns around THIS year, Bush will be a one term president like his father. It is the economy stupid. No one cares about the minor things when they are not employed, or if they see friends and relatives unemployed.
You make a lot of good points. Temporarily ending the H1-B program would cut the unemployment numbers by over one million and put all of our technical americans back to work. The other jobs that the foreign wives and their relatives of the million H1-B visa people also have, would also be available for more americans. Deporting 10 million illegals would create a huge demand for jobs in America(the tens of thousands of layoffs from restaurants and bar as mentioned in the article, would be more than overshadowed by the number of jobs opening up for Americans.
Bush would win re-election in a landslide, and the republican party would control the elections for decades(like Roosevelt did) by employing Americans and putting them back to work.
There was a time when we needed record immigration, back when our country was empty, when the homestead acts created a huge demand for new families moving here, when the west was undeveloped and unpopulated, when anyone who wanted to work could find work, etc.
To let in record number of immigrants at a time when skilled americans cannot find work, or when our cities, and highways are clogged with too many people, is crazy(except for the democrats).
"payrolls unexpectedly fell by 101,000 in December and the unemployment rate stayed at 6 percent, capping the worst two years for job creation since the Eisenhower administration in the 1950s."
" Factories slashed 65,000 jobs, prompting the industry to declare that continued losses have "reached crisis proportions," said Jerry Jasinowski, president of the National Association of Manufacturers."
" The total of unemployed workers rose to 8.6 million in December, up 82,000 from November, and 381,000 since October. The number of unemployed for at least 15 weeks climbed to 3.2 million, up 815,000 over the year."
" Manufacturers continued to contract, too, shedding 65,000 jobs in December. The sector lost 592,000 jobs last year and 2.4 million since April 1998."
The votes of 8.6 million unemployed Americans can change the outcome of a lot of future elections.
You: And why and who is responsible for this? If you are not working, or don't have your money out on the street taking risks, why should your income be anything but fixed
RETIREES.
THAT is the essence of the President Bush’s economic policy: follow the wishes of the NAFTA - GATT –WTO. Americans will have the following employment choices:
1) hamburger flippers
2) selling insurance and real estate to each other, or
3) getting a lucrative Govt. job.
If Eisenhower and the republicans did not have so many out of work americans in the late 1950's, we could have avoided the Kennedy-Johnson-Vietnam-1968-gun-control-rioting periods of the 1960's.
The recession of 1974-75 gave us the Carter years.
"It is the economy, stupid" made Bush senior a one term president and gave us the clinton years.
Where I live, even those jobs are increasingly being taken over by foreigners. New government workers, and all the McDonalds are now mostly asian and arab. Most of the employees at McDonalds do not speak english very well and cant count change very well either. All the gas stations by me are now owned by arab immigrants, who do not hire americans even for a cashier job.
Oh come on, why shouldn't we continue to make the same products everyone else in the world is making for much lower prices? Hey it's great when unions make prices for goods more expensive! And we all understand the brilliant economics behind continuing to create excess inventory instead of investing that capital into research and development to create novel products and services and improving productivity.
You must be one who is doing the “creative destruction.” Many others like myself, however, are the ones being “creatively destroyed.” How nice that we have such a diverse “market-based economy.”
The had better think twice … it is probably illegal for a Chinese Corporation to employ a foreigner – except as a spy.
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