Another Half Million Jobs Are History
Friday, December 05, 2008SUSIE GHARIB: American businesses cut jobs at an alarming rate last month. The Labor Department reported today that U.S. payrolls plunged by 533,000 jobs in November, the biggest monthly decline since 1974. That pushed the unemployment rate to a 15-year high of 6.7 percent. On Wall Street, the news initially sent the Dow tumbling more than 250 points, but it later recovered to finish with a 259 point gain. Scott Gurvey has more on today's dismal jobs report and what it says about the overall U.S. economy.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: A bad employment report had been expected, but nothing as bad as this. As a harbinger, it signals the worst recession of the post-World War II era. And economist Ethan Harris says trouble goes beyond the headline number.
ETHAN HARRIS, CO-CHIEF US ECONOMIST, BARCLAYS CAPITAL: There was a big drop in the number of people looking for work, which is you know, suggests that people thought it was just too hard to find a job. Had those workers not dropped out of this survey, instead of having a 6.7 percent unemployment rate it would have been closer to 7 percent.
GURVEY: Harris also notes cutbacks in hours, overtime and the use of temporary workers.
HARRIS: Employers are not only shedding workers, but they're also employing them shorter hours. A lot of workers are part time employed and they don't really want to be part-time employed. That hurts households just like joblessness. If your hours are getting cut and you have to work part time, it hurts your ability to spend.
GURVEY: And if people don't spend, the economy suffers more and the hole being dug gets deeper. Jan Hatzius of Goldman Sachs sees the recession continuing at least through the first half of next year.
JAN HATZIUS, CHIEF US ECONOMIST, GOLDMAN SACHS: What happens beyond that, I think is to a large extent going to depend on what the Federal government and the Fed do to get the economy going. I mean what we're hoping for is a very sizable fiscal stimulus program. We've been talking about the need for at least $300 to $500 billion per year of stimulus over the next couple of years.
GURVEY: Even then, economists expect the payroll declines to continue for many months. David Greenlaw of Morgan Stanley does not expect to see the employment picture improve until 2010.
DAVID GREENLAW, CHIEF US FIXED INCOME ECONOMIST, MORGAN STANLEY: I think the unemployment rate, which ticked up from 6.5 to 6.7 in today's report could get up as high as 9 percent by the end of 2009. I wouldn't be too surprised, however, if this was the single largest month of job loss that we're going to experience.
GURVEY: President-Elect Obama today repeated his call for a government spending program to save or create 2.5 million jobs. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
