itsmeeeeeee

Title
Payrolls drop for first time since 2003

Link
Payrolls drop for 1st time since 2003 - Yahoo! News
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Excerpt

Payrolls drop for first time since 2003

By JEANNINE AVERSA, AP Economics Writer 2 minutes ago

WASHINGTON - Nervous employers cut 17,000 jobs in January — the first such reduction in more than four years and a fresh sign that the economy is in danger of stalling.


The Labor Department's report, released Friday, also showed that the unemployment rate dipped slightly to 4.9 percent, from 5 percent, as the civilian labor force shrank slightly.

Job losses were widespread. Manufacturers, construction firms and a variety of professional and business services eliminated jobs in January — reflecting the toll of the housing and credit debacles. The government cut jobs, too. All those cuts swamped job gains in education, health care, retailing and elsewhere.

Wage growth also slowed, another indication that employers are tightening their belts amid the economic slowdown.

The unemployment rate declined a notch, from 5 percent in December to 4.9 percent in January. The jobless rate — calculated from a different statistical survey than the payroll figures — dipped as people, perhaps discouraged by their prospects, left the labor force for any number of reasons.

Taken together, the figures suggested that employers have grown cautious as they try to cope with fallout from housing and credit problems and rising worry about the ailing economy.

"It's a weak report. It tells us the probability of a recession is rising, but we don't know if we are there yet," said Joel Naroff, president of Naroff Economics Advisors.

The mind-set of businesses people is one of some fear and uncertainty about the economy's direction, he said. "They are thinking if there is some capital spending I should postpone for a while, I should do that. If there is some hiring I don't necessarily need to do right now, I can put that off for a few months to see what happens," Naroff said. "The problem with that thinking is that more economic weakness or a recession can become somewhat of a self-fulfilling prophecy."

To help ease the credit crisis, the Federal Reserve announced Friday that it will provide squeezed banks with another $60 billion in short-term loans through auctions on Feb. 11 and Feb. 25. The Fed started the auctions in December and since then has already provided a total of $100 billion in loans to banks.

Underscoring the depths of the housing slump, spending by private builders on residential projects last year plunged by a record 18.3 percent. Spending on all construction projects by both private builders and the government fell by 2.6 percent last year, also an all-time low in records dating back to 1993.

On the jobs front, economists were predicting employers would boost payrolls by around 70,000, and that the unemployment rate would stay at 5 percent.

Fears of a recession have grown.

The White House and Congress are working to enact a package to stimulate the economy. And, the Federal Reserve has gotten much more aggressive — ordering two big interest rate reductions in just over a week.

A severely depressed housing market, hard-to-get credit, turbulence on Wall Street and "some softening in labor markets" were cited by the Fed, when it lowered rates by a bold half point on Wednesday.

The unemployment rate had shot up in December to 5 percent, from 4.7 percent in November. The magnitude of that increase — something not seen since right after the September 2001 terror attacks — sent off alarm bells. In the past, such a big increase in the jobless rate signaled the economy was starting a recession or already in one.

The health of the nation's job market is a critical factor shaping how the overall economy fares. Until now, job and wage growth have helped cushion people from the negative forces coming from the housing bust and credit crunch. If companies continue to cut back on hiring and put a lid on wages, though, that will spell more trouble for the economy.

Workers saw wages grow at a slower pace last month.

Average hourly earnings for jobholders rose to $17.75 in January, a 0.2 percent increase from the previous month. It was half the pace logged in December. Economists were predicting a slightly larger gain of 0.3 percent. Over the last 12 months wages went up by 3.7 percent. With high energy and food prices, though, workers may feel squeezed and feel like their paychecks aren't stretching that far.

The 17,000 drop was in total payrolls — both government and private employers — in January. The government sliced 18,000 positions, while private employers added just 1,000 jobs.

The drop in payrolls marked a significant deterioration in employment conditions. In December, employers added 82,000 new jobs. January's decline was the first since August 2003, when the labor market was still struggling to recover from the 2001 recession.

The government on Friday also released annual revisions — based on more complete information — to its payroll data. Those revisions showed job creation was even weaker last year than initially thought.

The economy added an average of just 95,000 jobs per month in 2007, versus an earlier estimate of 111,000 a month for the year. In 2006, payroll employment grew by an average of 175,000 a month.

Construction and factory workers have been especially hard hit by the meltdown in housing and other troubles in the economy.

In January, construction companies cut 27,000 jobs, with most of the decline concentrated in housing. The construction industry has lost a total of 284,000 jobs since its employment peak in September 2006.

Factories eliminated 28,000 positions in January, and have cut 269,000 jobs over the last 12 months.

The economy nearly stalled in the final three months of last year, and some economists believe it may actually be shrinking now.

Under one rough rule, the economy would have to contract for six months in a row for the country to be considered in a recession. The likelihood of a recession has risen sharply over the past year, and analysts increasingly believe the U.S. will be in one during the first half of 2008. The worry is that people and businesses will hunker down and pull back their spending, sending the economy into a tailspin.

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Comment:

round and round it goes, down and down it goes...

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ciaobox2007

But Bush is UPBEAT!!!!! Isn't that of some comfort?

Bush Is Upbeat About Economy's Prospects

Bush Is Upbeat About Economy's Prospects
But Some Experts Urge Steps to Avert RecessionBy Michael Abramowitz and Neil Irwin
Washington Post Staff Writers

The White House is betting that the steps it has taken to address the housing and financial crises will be enough to avert a recession without resorting to a major tax cut or new spending, as leading economists in both parties have urged, senior administration officials said.

In a news conference yesterday, President Bush said he is considering various measures to stimulate the economy but made clear his belief that it is not time to pull the trigger. "My view of the economy is that the fundamentals are strong, that we've had strong growth for a reason: that we're competitive, we got flexible workplace, that we kept taxes low, exports are up," Bush said.

Bush's comments reflect a consensus among his economic advisers that it is still possible to avoid a recession and that their efforts should focus on executing the programs they have already announced for containing problems in the mortgage markets -- such as the plan to freeze interest rates on certain subprime mortgages or an initiative to pay for mortgage counselors who would advise people at risk of losing their homes.

The White House is more sanguine than several of the nation's most prominent economists, who have been urging the federal government in recent days to adopt a much more vigorous fiscal policy to head off the possibility of a damaging long-term recession.

Martin S. Feldstein, a Harvard economist who was an adviser to President Ronald Reagan, has said that he thinks there is a 50 percent chance of a recession next year and that Congress should pass a tax cut that would depend on how much the economy slows. Lawrence H. Summers, who was Treasury secretary in President Bill Clinton's administration, called this week for a temporary tax cut, longer-lasting unemployment insurance benefits and additional money for food stamps. Former Federal Reserve chairman Alan Greenspan has said that he thinks the considerable risk of a recession warrants making emergency aid available to homeowners at risk.

But in an interview this week, Bush's outgoing economic policy adviser, Allan Hubbard, said the White House does not see the need for such measures at the moment. "We just don't see any reason why the economy won't continue to expand," he said.

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what's the ratio of schrute bucks to stanley nickels?

itsmeeeeeee

anytime that son of a bitch is upbeat, i get very nervous.

reminds me of the old joke, "how can you tell when bush is lying?" "his lips move".

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Rollerball

You took the words right out of my mouth.

I don't understand why the media still reports on what he says, has anything ever NOT been the opposite of what he said it will be?



But remember KMart Shoppers, don't let a little thing like Loss of Income stop you from getting out there and shopping for America.

kblair7

Bush has very little control over MONETARY POLICY & GROWTH POLICY,he can influence fiscal policy (i.e. Taxation/expenses etc). These two variables are outside the control of party politics in the sense that democrats and republicans do not set ST/LT interest rates, they do not have the ability to directly manage or stimulate capitol (they can't print money).

Depending on what school of economics you choose to adhere too, Kenyes said that in times of depression people tend to want to save more, this is usually a good thing but when EVERYONE starts hording money under their mattress (going back to an example I used) it can have adverse effects, the lower the consumption demand, it adversely effects aggregate demand, (more in the short term I think). Which in turn will cause unemployment, since the decline of aggregate demand will cause national output (Real GDP) and income to fall, thusly unemployment will increase. The fed KNOWS THIS, and they are attempting to counter such behavior by cutting checks for people. Its a small amount but its enough to get people to spend and not get entirely too thrifty. Greenspan and Bernake play a dangerous game here, even Friedman would shake his head at this foolishness. Such microeconomic activism will never, and has never worked.

DRS112

Do you really think that the people that don't save money in banks control enough money to make a difference?

itsmeeeeeee

i don't buy that. period.

economic policy - tax policy, etc - is a tremendous influence on the greater economy. and i don't need a degree in economics to come to that conclusion. my 50+ years of personal observation and common sense are enough.

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itsmeeeeeee

i'm NOT worried about losing my job. but when others lose theirs, it hurts me financially just the same. i'm on commission, and when the economy sucks to this degree, it's not only jobs that are cut, it's advertising.

your postive faith-based pollyanna economic attitude doesn't change or reflect reality.
this "as long as it doesn't effect me" / "let then eat cake" point of view will catch up to you sooner or later, honey. and when it does, don't forget that you were warned.

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Rollerball

See that, just like I said earlier in another thread. LeftoFright has a personal experience anecdote for all occasions.

Rollerball

Could you please find me the post where I admi.... oh wait... here it is:







Gee. You're right! And I thought you were just lying again.