JIM LEHRER: U.S. employers cut far more jobs than expected last month; that word came from the Labor Department today. It was a fresh blow to hopes for an early recovery.
The report said 467,000 jobs were eliminated in June. That was 100,000 more than most economists predicted. The unemployment rate rose 0.1 point to 9.5 percent, the highest in 26 years.
In response, President Obama said he was “disappointed” and “deeply concerned.” He spoke today with the Associated Press.
PRESIDENT BARACK OBAMA: We have successfully stabilized the financial markets, and that’s important, because that was a huge drag that helped precipitate the crisis. We’ve started to see some stabilization on housing. But what we’re still seeing is too many jobs lost, too many families who are worried about whether they’re going to be next.
JIM LEHRER: The jobs report set off a day-long selling binge on Wall Street. Major indexes fell more than 2 percent.
The Dow Jones industrial average lost 223 points to close at 8,280. The Nasdaq was down 49 points to close at 1,796. For the short holiday week, the Dow lost nearly 2 percent; the Nasdaq fell more than 2 percent.
And oil prices hit their lowest levels in a month on the employment news. Oil closed below $67 a barrel in New York trading.
Jeffrey Brown has more of our lead story coverage.
Construction job losses continue
JEFFREY BROWN: And our closer look at today's unemployment figures and what they say about the prospects for economic recovery comes from David Leonhardt, economics columnist for the New York Times.
DAVID LEONHARDT, New York Times: Thank you.
JEFFREY BROWN: The number of jobs lost every month had been heading downward.
DAVID LEONHARDT: Yes.
JEFFREY BROWN: Is it a surprise that it went back up this month?
DAVID LEONHARDT: It's a moderate surprise. And the size of the increase is what's particularly disturbing. I mean, we'd fallen to 322,000 jobs lost in May, which is still a bad number, but was so far down from 750,000 or so that were lost in January. To bump all the way up to 470,000 is quite worrisome, and it's just a sign of how long this downturn is likely to last.
JEFFREY BROWN: Before we go there, what else do we see in terms of sectors, parts of the economy?
DAVID LEONHARDT: We see unbelievable continued losses in construction. I mean, that's what the bursting of a housing bubble is. So we've now lost -- since the beginning of 2007, we've lost almost 20 percent of jobs in construction, which is a stunning number.
We see continued heavy losses in manufacturing. We see broad losses, really, pretty much across the board, except for education and health. And we even saw some losses in federal government employment last month, which may just be a blip related to the census hiring, but it's still people who've lost their jobs.
JEFFREY BROWN: Demographics, I mean, a lot has been talked about on gender, for one thing, gender, age, et cetera. What do you see?
DAVID LEONHARDT: Last month, the recession took another really hard whack on men in the labor force. The unemployment rate for men is now 10 percent. It's nearly doubled in just a year.
The unemployment rate for women is still below 8 percent, so bad, but not as bad.
Over the early months of this year, the first half of this year now, we've seen this become a little bit more of an equal opportunity recession, so it has still hit less educated workers and minorities much more than it's hit more educated workers or whites. But it's spread its pain a little bit more to college graduates, for example, over the course of the last six months.
JEFFREY BROWN: And wages?
DAVID LEONHARDT: Wages are this really funny picture, because, in a strange way, there may be the only silver lining we have in the report.
So let's start with the bad news. The bad news is that hourly wages are stuck; they really aren't rising at all. And the workweek is shrinking. And so that means the weekly paycheck that people are taking home is shrinking a little bit.
But over the course of the last year, because we had some increases earlier on, the weekly paycheck is still up about 1 percent, and here's where the silver lining comes in. Prices are actually down 1 percent over the last year.
And so, amazingly enough, in the middle of this terrible recession, the worst in a generation, the buying power of the typical worker who still has his or her job...
JEFFREY BROWN: That's the key phrase, of course.
DAVID LEONHARDT: That is the key phrase, but it's important to remember that's the majority, right, by far the majority. The buying power of the typical worker who still has his or her job has increased. And for this point in a recession, I mean, a year-and-a-half into a recession, that is highly unusual.
Gauging when recovery starts
JEFFREY BROWN: All right, now let's explore some of the bigger picture that you started to raise. We always talk about unemployment as a lagging indicator, right? So the expectation is that a recovery could be underway, but the number, the jobless number, would still be going up.
DAVID LEONHARDT: That's right. The odds that a recovery is underway yet are extremely, extremely small. I mean, with job losses of this size, the odds that the economy is growing are something approaching zero. I mean, this was a larger job loss relative to the size of the economy than any month in the 1990-'91 or 2001 recession. So this is still a terrible month.
But that's right. We could get the economy growing later this year, and we could still have job losses. And that's because employers don't really start to ramp up and hire lots of new workers until they're very confident that not only is the economy growing, but it's growing at a pretty rapid pace.
And that's why this is -- we're not anywhere close to this turning and the economy feeling good.
JEFFREY BROWN: Today just made that as clear as ever.
DAVID LEONHARDT: That's right. I mean, you could have some -- before today, you could have some hope.
JEFFREY BROWN: And people did. I mean, there's been a lot of talk about maybe things have started to turn.
DAVID LEONHARDT: Absolutely. And it was -- and it was not unreasonable, in that things -- we've stepped back from the precipice. But this makes it clear that we've stepped back from the precipice, but we're a long, long way from being in a good place.
JEFFREY BROWN: Now, it's also raised a lot of issues, put them back on the table, if they ever went away. You wrote a column yesterday; you raised some of these questions. One was about the stimulus.
DAVID LEONHARDT: Yes.
JEFFREY BROWN: How much has it accomplished? Is it possible that we need to look at another one?
DAVID LEONHARDT: The first thing that's important to say is that there is no one out there who knows how much of a difference the stimulus is making. It is literally an unanswerable question. So we have to make estimates, and we can't rerun a scenario in which we have the past six month without a stimulus package.
It seems to have been making a small difference. We can see that in consumer spending. It seems that the tax cut is making a small difference.
JEFFREY BROWN: And at the state level, I should say, because our viewers know yesterday I talked to an expert here about the state budgets...
DAVID LEONHARDT: Right.
JEFFREY BROWN: ... who said that it has been making some difference, clearly, in helping states tide over a bit.
DAVID LEONHARDT: Absolutely. And if you look at today's employment numbers, we are not seeing big declines in state employment, which, when you look at what's going on with state budgets, is somewhat surprising and, again, is another indication that the stimulus package is making something of a difference.
But there's no way the stimulus package can completely erase the effects of a recession of this depth. This stimulus package wasn't perfectly designed. I think it was pretty good, but it was by no means perfect. And it may not have been big enough. And that raises the question of whether we're going to need another one down the line.
Another stimulus package?
JEFFREY BROWN: And are you starting to hear that question now from economists, from politicians?
DAVID LEONHARDT: You're starting to hear it a little bit. David Axelrod, the top Obama adviser, talked over the weekend about the fact that it's still too early to think about whether we need a new one, and that seems right to me economically, as well.
We're only now in May and June really getting the big ramp-up in stimulus spending. And so, if we get to September or October when we've really had four, five, six months of really strong stimulus spending, and things still look terrible, I think that's the point at which you want to talk about the possibility of a second stimulus.
JEFFREY BROWN: You mentioned Axelrod and the -- put it in political terms here. I mean, another thing you wrote about yesterday is this question of optimism and pessimism, as a political factor. What's the right approach -- what's the right thing to be saying, what's the right thing to be telling people at this point? All this is again a question, right?
DAVID LEONHARDT: It is. And, look, the administration has a hard job here, right, because on the one hand it needs to be realistic. And on the other hand, it does want to do some of the FDR bucking up the nation.
I think they got this a little bit wrong, though. They came in, and I think they were clearly too optimistic. They sort of believed the consensus Wall Street economic forecasts, which at this point I think we know not to put too much faith in.
And as a result, they said that unemployment now would only be at around 8 percent, and instead it's at 9.5 percent. And that creates political headaches for them, and it also doesn't really appropriately prepare people for just how long and how tough a slog we're going to have.
Unemployment likely to rise
JEFFREY BROWN: And, briefly, that slog includes the jobs number probably getting up to 10 percent.
DAVID LEONHARDT: I think at this point it would be extremely unusual if the unemployment rate didn't get above 10 percent. And so we're then looking at what may well be the worst recession since the Great Depression. We are not there yet -- the early '80s were still worse -- but we, unfortunately, seem to be on our way.
JEFFREY BROWN: All right, David Leonhardt, the New York Times, thanks again.
DAVID LEONHARDT: Thank you.