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| ECONOMIC TURNAROUND? | |
 October 3, 2003  | |
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The jobless rate remained steady in September and U.S. payrolls grew for the first time in eight months. Regional economists discuss what the latest job numbers may mean for the U.S. economy.
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For a closer look at the numbers and the employment picture in different parts of the country, I'm joined by Yolanda Kodrzycki, an assistant vice president at the Federal Reserve Bank of Boston; Donald Grimes of the University of Michigan's Institute of Labor and Industrial Relations. He joins us tonight from Tampa. And William Conerly, he runs his own economic consulting firm in Portland, Oregon. And, William Conerly, let's start with you. When you sift the numbers, what stands out as significant to you and what do you think it means?
RAY SUAREZ: And they always call unemployment a lagging indicator; when we talk about how long it's lagging, what does this mean to have last month do well; that people started to see positive signs three to six months ago? WILLIAM CONERLY: Well, what I'm really focusing on is the growth of jobs, and we haven't had a net gain in total employment since January. The unemployment rate is a little bit misleading and especially around turning points you get some people who have been discouraged coming back into the job market and that will artificially keep your unemployment rate up a little bit high. But the really good news here was that gain in employment. |
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| The significance of the new jobs numbers | |||||||||||||||||||||||||||||
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RAY SUAREZ: Yolanda Kodrzycki, is a 57,000 job gain, as happy an event as it is for the 57,000 job holders, really significant in an employment pool of 132 million people?
Now, as I look at that number, though, I see employers still tentative. We had 66,000 temporary help jobs created. That indicates to me that employers are willing to add to their payrolls but not to the real permanent payrolls. RAY SUAREZ: And Donald Grimes, what pops out from the numbers for you? DONALD GRIMES: Well, I think one thing we have to keep in mind is that last fall there was also a significant improvement in the job picture between August and November we actually added 200,000 jobs in the United States. But then the economy slowed down as GDP fell off in the fall and winter, and then we went back into this negative growth period. RAY SUAREZ: How many jobs, Mr. Grimes, does the economy have to produce in an average month just to handle the population increase, the people graduating from schools and entering the labor force, just to stay even? DONALD GRIMES: Usually about a hundred and twenty-five to a hundred and fifty thousand jobs a month would roughly hold the unemployment rate constant or reduce it. |
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| A regional look at the economy | |||||||||||||||||||||||||||||
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RAY SUAREZ: How are things looking in your part of the country, the Midwest?
RAY SUAREZ: That 29,000 loss is well down from earlier months losses, isn't it? DONALD GRIMES: Oh yeah, between the end of the recession in November, 2001, and September, we were losing, on average, about 60,000 manufacturing jobs every month. So the manufacturing sector has been hemorrhaging jobs for a long time. And in fact, actually if you go back to 1979, that was our peak month for manufacturing employment in the United States, peak year. That was about 19.5 million. We currently employ about 14.5 million, so there's been a very steady decline in manufacturing employment since 1979. RAY SUAREZ: William Conerly, what does the picture look like in the Pacific Northwest? WILLIAM CONERLY: Well, the Pacific Northwest is still the weakest part of the country. For most of the past two years, Oregon has had the highest unemployment rate in the nation. We're now tied with Alaska for the highest rate. Washington is regularly second or third in unemployment rankings. The problem this is part of the country is very dependent on business capital spending, business spending on new equipment or computer software. And that has been the weakest part of the national economy. Our second biggest concentration is exporting. We've been exporting since furs were sent to China in the 1800s, and that's the second worst part of the national economy. So we are just dependent on those parts of the economy, which are very weak. We don't have state data comparable to the national data that came out. We are going to have to wait a couple of weeks for that. But right now the jobs picture is flat. There is an improvement only in my forecast. I think in the next few months, it will be there, but there certainly is no evidence hard in the data right now that we're improving.
WILLIAM CONERLY: Yeah, California is more in line with the nation. But there's an interesting difference. The Bay area, the San Francisco Bay area has been losing jobs over the last year and southern California looks more like the nation, more or less flat in the last year, and that will make it interesting with that recall election. The more traditionally liberal area is hurting more economically, while the area that's traditionally conservative is on a slightly better economic stance. RAY SUAREZ: Yolanda Kodrzycki, the view from the Northeast? YOLANDA KODRZYCKI: Well, there's some similarity between the Northeast and the West Coast. We are very reliant on technology in New England, so we live by technology and we die by technology. The New England region has lost 220,000 jobs since the beginning of 2001. And the picture looks worse as you get closer to Boston. Massachusetts has had 150,000 job loss during that time period and in percentage terms, it's had the most severe job loss of any of the states. Now one bright side is that our unemployment rate remains lower than the national average. It's a full point lower. And we think that may be because during hard times, a lot of our technology folks start businesses of their own, so they're counted as self-employed rather than unemployed. |
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| What is the outlook of the U.S. economy? | |||||||||||||||||||||||||||||
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YOLANDA KODRZYCKI: Well, I think it's a very mixed picture. I'd like to say that my glass is half full, but it's half full of diet soda, not champagne. The people who have lost their jobs in this long downturn still aren't seeing a significant hiring going on. And that is why we get more and more reports of people who are out of work for a long period of time, or who can't work as many hours as they would like to work. It would take a sustained stronger economic recovery to turn that around. And the jury is still out. RAY SUAREZ: Donald Grimes, can you see looking at the latest statistics on both manufacturing and employment that the economy got a shot from the tax rebates that were sent out to so many millions of families over the last several months? DONALD GRIMES: Yeah, I think definitely if you look at actually the consumer spending reports for July and August, at an annual rate, I think they were up like 7.5 percent, which is really why you are going to see strong GDP growth numbers I think in the third and fourth quarter and then the question will be whether or not we can begin to get some business investment that will drive the entire economy at a much higher rate, say 4 percent or more, in 2004, and that will generate the jobs we need throughout the country. RAY SUAREZ: But does that give a spur to manufacturing employment, or does it just mean that we buy more imported stuff?
RAY SUAREZ: Donald Grimes, how many months do you need to see of small gains like this one before you feel like -- excuse me William Conerly, how many months do you want to see before you feel we are starting the long walk back? WILLIAM CONERLY: Well, given that this is ... that this increase is consistent with what I'm saying and everybody else is saying, just another couple of months would confirm it if we were getting evidence contrary to our prior beliefs, it may take me a little longer to come around. But here it is October. If in the report we get in early December, we have, we've seen a couple more months of steadily increasing employment, then I think we are going to breathe a big sigh of relief and say we've finally put an end to the recession. RAY SUAREZ: Guests, thank you all. |
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RAY
SUAREZ: September brought some better jobs news from the Labor Department.
The jobless rate remained the same, rather than increasing as many economists
had predicted it would, and business payrolls rose by 57,000. But the
data showed significant problems remain. The number of people looking
for work for more than six months grew to 2.1 million, and nearly five
million people worked part-time jobs because they could not find full-time
work. 
WILLIAM
CONERLY: Well, this is the first really good numbers we've seen on the
national basis since January. We always caution people not to get too
much caught up in one single month's number. But the fact is, this is
the first single month's number that's looked good in nine months. 
YOLANDA
KODRZYCKI: Well, it does represent a small uptick. The Commerce Department
hasn't yet released its third quarter GDP figures, but we feel confident
that there was substantial economic growth in the third quarter. If
that can be sustained, then we might see a string of positive additions
to the employment roles.
DONALD
GRIMES: I think the one thing you have to keep in mind about the Midwest
is that it's the most industrial part of the country. And even in the
September jobs report, the manufacturing sector lost 29,000 jobs. So
since the Midwest is most dependent upon an improvement in the manufacturing
sector, I still haven't seen quite the improvement in the manufacturing
sector that would lead me to believe that the Midwest is going to turn
around anytime soon. 
RAY
SUAREZ: Oregon and Washington have been among the worst hit states in
the union. What about California? 
RAY
SUAREZ: Earlier you mentioned the rise in temporary hiring. This month's
numbers also brought up long-term unemployed and people who feel they
are underemployed. They want to work more hours. How do all these different
statistics tell us in a broad sense about what's going on in the labor
market? 
DONALD
GRIMES: Well, the problem with manufacturing as you identified, is imports
-- and one problem. But the bigger problem in terms of jobs in manufacturing
is the productivity growth rate which is inevitably going to mean that
we are going to lose jobs in manufacturing. If the economy grows really
strongly, we may get a temporary bounce in employment and manufacturing,
but over the long-term, all we can really hope for is a slow loss of
jobs in manufacturing.