Economic News Continues To Sour
JACKI LYDEN, host:
Welcome back to ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden. The economic news this week has been about as dismal as it can get. The U.S. government had to come up with another $30 billion to shore up AIG, the big insurance company.
Stocks were down sharply as investors wait for details on how the Treasury Department will deal with the banking crisis. And yesterday, we learned that the unemployment rate shot up to 8.1 percent, the highest in a quarter-century.
NPR's Tom Gjelten is here to sort through the economic crisis. Thanks for coming in, Tom.
TOM GJELTEN: Hi, Jacki.
LYDEN: The headline here has to be the unemployment figures, of course.
GJELTEN: Right, Jacki. If we look at the total job losses in that figure, 651,000 jobs were lost in the month of February. What's interesting, that's actually in line with what economists were expecting.
However, the bottom line here, Jacki, is that jobs are disappearing in this economy at the fastest rate since 1982, and it's getting worse - 8.1 percent is roughly what the Obama administration predicted would be the unemployment rate average for the whole year. It's only March, and we're already there.
LYDEN: So Tom, we had the stimulus package, the Federal Reserve Bank has been cutting interest rates, and it doesn't look like it's enough.
GJELTEN: It's not enough, Jacki. If you look back, recall that this economic crisis began with a credit crisis last summer and fall, and economists say this unemployment figure, the job losses, is a consequence of that.
There is a connection. What that means is that we're not going to get this fixed until the banking crisis is fixed, regardless of what happens with the stimulus program.
LYDEN: Well, as if we needed more confirmation that we're deeply into a recession, the S&P 500 this week reached lows not seen since 1996. And we did have what looked like a rally going on Wednesday, but it didn't last. Why not?
GJELTEN: Jacki, this is another example of the volatility that has characterized the markets for months now, and you get this volatility because there are so many factors happening at the same time.
On Wednesday, there was an expectation that the government of China was going to announce new stimulus spending. The prime minister, Wen Jiabao, came out. He said that there would be a stimulus program, but he gave no details of it. The disappointment on Wall Street then led to a collapse on the following day.
In addition, you had General Motors, the company's auditor coming out and saying it was going to be difficult for the company to avoid bankruptcy. That immediately, of course, caused a crisis of confidence. I mean, we're talking about General Motors here. And then the banks. Until investors see a credible administration plan for dealing with this problem of toxic assets, the financial stocks are going to keep declining. We saw evidence of that with Citigroup - a share of Citigroup actually for a point dropping below $1 a share.
LYDEN: Yeah, down below the ATM fee. Watching the news crawl across the TV screen today, listening to our own reportage, this week has really felt almost like a war week with breaking news, different fronts. What does a week like this mean for the Obama administration's efforts to deal with the crisis?
GJELTEN: Jacki, they just can't keep up with it. It is happening too fast, and it's all aggravated by the fact that this is a new administration.
Treasury Secretary Tim Geithner is doing all he can from his point of view, but he doesn't have the staff. And we just learned this week that the two people that he had picked to be his top deputies decided they wouldn't take the job.
So, at the very time when you have a Treasury Department dealing with an unprecedented crisis, you have a Treasury Department which is not even fully staffed.
LYDEN: Is it ridiculous to ask you if there's any good news?
GJELTEN: It's hard to find any good news there. You know, the price of oil has actually started to go up, and some people think that that may indicate that some expectation, at least in the oil market, that the demand, global demand, will be returning. That would be good news. We don't know if it's going to last.
LYDEN: All right. Well, NPR's Tom Gjelten, thanks, I guess.
GJELTEN: You're welcome, Jacki.