TOPICS > Economy

U.S. Recovering Jobs But Pace Has Slowed, Analyst Says

October 8, 2010 at 12:00 AM EDT
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The Labor Department reported that there were 95,000 jobs lost last month and that September's numbers continue 14 straight months of unemployment being above 9.5 percent. Judy Woodruff reports on the latest numbers, then Ray Suarez talks to Lakshman Achuthan, managing director of the Economic Cycle Research Institute.
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JUDY WOODRUFF: The unemployment rate in the U.S. stayed stuck at 9.6 percent in September. The Labor Department reported that today. It said the private sector added 64,000 jobs, but that was more than offset by layoffs of nearly 160,000 teachers and other public employees. The result was a net loss of 95,000 jobs.

President Obama acknowledged the tough going in the job market as he appeared at a small business in Bladensburg, Maryland.

U.S. PRESIDENT BARACK OBAMA: Yes, the trend line in private sector job growth is moving in the right direction, but I’m not interested in trends or figures as much as I am interested in the people behind them — the millions of honest, hardworking Americans swept up in the most devastating recession of our lifetimes.

JUDY WOODRUFF: The president charged, Republicans have opposed efforts to improve things.

But House Minority Leader John Boehner blamed Democrats for prolonging the misery. He spoke in Westchester, Ohio.

HOUSE MINORITY LEADER JOHN BOEHNER: The bottom line is this. To help our economy create jobs, we have to stop all of the coming tax hikes, and we have to cut spending. And, to get all of this done, we need to change the Congress itself now.

(CHEERING AND APPLAUSE)

JUDY WOODRUFF: There are now nearly 15 million people unemployed in the U.S.

Ray Suarez takes a closer look at the numbers.

RAY SUAREZ: Here to walk us through what’s in the new report is Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

And, Lakshman, there is a lot of data in a monthly jobs report. What is your overall impression of the numbers? And what are the really important points to take out of the monthly report?

LAKSHMAN ACHUTHAN, managing director, Economic Cycle Research Institute: Well, I mean, the headline number is a big negative. And we certainly would like see that positive.

When we look inside the report, you do see it’s mostly the public sector job losses. The census workers, which are a temporary hire, we saw that they have been losing their jobs, because the census is winding up.

But the real problem and a bit of a surprise was the extent of the state and local firings of teachers, as you mentioned, and other municipal and local government workers, where the budgets and the budget deficits are really forcing cuts, now that, you know, some of the temporary measures, say, from the stimulus are kind of wearing off on those budgets.

And so that’s definitely kind of a negative headline that we have seen for most of the day. The positive here as you mentioned also is that the private sector all year has continued to add jobs. This is — this means that we remain in an economic recovery. As weak as it is on the jobs front, we remain in a recovery.

However, the pace of that recovery has begun to slow. We saw the private sector adding many more jobs in the spring, through late spring, and then since then, as the overall economy has started to grow slower, throttled back, so has private sector jobs growth.

And so what really matters here — and it’s an open question — is whether or not this slowdown culminates in a new recession, where you will have negative private sector job growth — job losses again, or if the economy can find its footing and have the so-called soft landing.

RAY SUAREZ: What does that throttling back, as you describe it, mean? What does it mean that employers are concluding about the state of the economy?

LAKSHMAN ACHUTHAN: Well, remember, I mean, the employers, business managers are wary about any slowing in the economy.

And it has started to slow. You have seen GDP growth begin to slow, sales and other measures of the coincident economy, including jobs growth, all slowing since around the second quarter. And there is that recent muscle memory of the trauma of the crisis of just a couple of years ago, where many businesses didn’t survive.

So, that fear in some sense is holding back hiring. But it’s not as though employers actually have to be comfortable in order to hire. They also have to be scared, in a sense, that they’re going to lose market share if they don’t hire someone.

And you see a bit of a mix when you look at the economy. For example, the airlines are beginning to hire people back, because they just don’t have enough capacity and they’re afraid that, if they don’t do it, someone else will take those — that business.

RAY SUAREZ: As we watched the number of jobless increase over the past several years, economists like yourself often noted that unemployment was a lagging indicator.

But, just recently, it’s been pointed out that the recession ended 15 months ago. Lagging by how long?

LAKSHMAN ACHUTHAN: Well, you know, that’s an interesting point. It’s a roughly coincident indicator, actually.

Unemployment will rise noticeably right in front of a recession, and it should fall noticeably right after a recession ends. Here, it actually did begin to fall rather quickly. The recession ended in June of ’09, and the unemployment rate peaked in October of ’09. That’s a faster start to recovery in the unemployment rate than we have seen for the last two recessions, for about 20-something years.

So, it’s actually happening faster. The problem is that it’s really high, and it’s not happening fast enough. We have lowered the unemployment rate about half-a-percent. However, when you look inside that number, half of the people who are unemployed have been unemployed for a very long time. And they’re actually being left behind by the recovery because their skills don’t fit very well with the types of jobs that the recovery is offering.

And, at the same time, you have so-called short-duration unemployment. What it means in English is, you get fired, but you get your job back in a month or two or three. And this group — it’s about a half of the unemployed — are seeing the unemployment rate drop fairly clearly and fairly quickly.

And so it’s almost like we have two job markets here. And one of them is not being served at all by the recovery.

RAY SUAREZ: Lakshman Achuthan, thanks for joining us.

LAKSHMAN ACHUTHAN: Thank you.