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Massive Job Cuts Renew Calls for Quick Action on Stimulus

Several U.S. companies reeling from the economic downturn announced a total of some 45,000 job cuts on Monday. Analysts assess what the employment situation signals about new government efforts to revive the economy.

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  • JEFFREY BROWN:

    And we look at the job situation now and the proposed solutions with two economists: Dean Baker, co-director of the Center for Economic and Policy Research; and J.D. Foster, a senior fellow at the Heritage Foundation.

    Well, Dean Baker, first, these new job losses. How do we explain what's going on? Have we entered some kind of new stage or is this what we expected to come from the last few months?

    DEAN BAKER, Center for Economic and Policy Research: Well, it's a very serious downward spiral. We're losing jobs at the rate of more than 500,000 a month over the last three months of last year. And I think, actually, there's some measurement issues. It might have been over 600,000.

    It looks like that might even be accelerating. We're basically in a freefall right now. This is as bad as the economy has been in certainly in my lifetime. And it's — you know, again, we were in a serious situation last fall. I think it's even getting even worse right now.

  • JEFFREY BROWN:

    Do you see any kind of pattern to the types of companies that are laying off or the types of jobs?

  • DEAN BAKER:

    Well, what's striking is it's just about every sector. Originally, manufacturing, of course, was hardest hit, but, you know, we had the numbers here today — you had Pfizer, the drug industry, we have Nextel, Sprint Nextel, telecommunications. Yesterday it was Circuit City with 30,000 jobs.

    So we're seeing it in just about every sector of the economy now, so it's not just manufacturing. It's not just a narrow sector of the economy. It's really just about everywhere.

  • JEFFREY BROWN:

    What do you see going on, J.D. Foster?

  • J.D. FOSTER, The Heritage Foundation:

    Well, what I see is much of what Dean said. The economy is in deep trouble. We are shedding jobs at a very rapid rate.

    The hope is that the rate of decline in the economy is going to slow a bit in the current quarter, but we have no evidence for that at all. We are losing jobs across the board. We are losing jobs in exporters, in high tech. Of course, Wall Street's in implosion. We would be losing more jobs in residential construction, but we've already lost most of them that we're going to lose.

    So the economy is in real trouble. We're going to be shedding jobs for quite some time. I think it will be a very long time, perhaps until 2011, before we see appreciable job recovery, under current policies and on the path we're on now. And that's if we have no further bad luck, no further shocks coming from abroad, for example.

    So I think we're in a situation where we're in trouble and we very much need an effective stimulus package.