Economy Burdened by Job Losses, Slipping Sales, Oil Costs

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• RAY SUAREZ:

  Today's news of continuing job losses follows other signs of bleeding in the nation's economy. In addition to the sixth straight month of growing unemployment, oil prices kept spiking upward — trading close to $145 a barrel this week — and record gas prices were behind more bad news from Detroit.

  Sales of new cars fell to a 10-year low, and General Motors stock fell below $10 a share, its lowest level in five decades. Consumer confidence dropped to its lowest point since 1980. And Wall Street's fortunes continued spiraling down, as well, entering bear market territory.

  For a closer look at all of this, we turn to Nariman Behravesh, chief economist for Global Insight, an economic consulting firm, and Jim Ellis, assisting managing editor of BusinessWeek magazine.

  Nariman Behravesh, what do today's job numbers tell you about the health of the American economy?

• NARIMAN BEHRAVESH, Global Insight:

  Well, I think they confirm that the U.S. is in a recession, probably a mild recession. But when you get six months of job losses like this, as Jim Lehrer was saying earlier, 438,000 jobs lost since the beginning of the year, that's a recession.

  But all the indications are so far that these are fairly small numbers, historically in terms of a recession, so our view right now is that we're likely to be looking at a fairly mild recession.

• RAY SUAREZ:

  But this isn't technically one, right? I don't want to split hairs, but we haven't had those two consecutive quarters of losses in the size of the gross domestic product, right?

• NARIMAN BEHRAVESH:

  Well, it's a little more complicated than that. We won't get into the technicalities. But two negative quarters doesn't necessarily make a recession and vice versa, in the sense that you can get a recession and not have two negative quarters.

  So, again, from that perspective, you shouldn't be just looking at the GDP numbers, which — you're right — are still in positive territory, but look at a broader range of measures, employment, for example, income growth, industrial production. And when you look at those, I think it's fairly clear that the economy is shrinking, basically.

• RAY SUAREZ:

  Jim Ellis, where do those new job numbers lead you?

• JIM ELLIS, BusinessWeek Magazine:

  The new jobs numbers basically say that the economy has a long way to go before we even start to see a turnaround. That puts the Fed in a really difficult position, because the Fed is worried about growth, but at the same time it's also worried about inflation.

  And right now, inflation is starting to show its head, and that means that the Fed's under a lot of pressure wanting to raise interest rates, but knowing that, if it does, that that's going to actually hurt the weakness in the economy that we're already seeing from the jobs numbers.