Layoffs Slow But Jobless Rate Still Higher In April
RENEE MONTAGNE, host:
NPR's business news starts with unemployment at nearly 9 percent.
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MONTAGNE: The American economy lost nearly 540,000 jobs in April. The Labor Department's latest unemployment numbers came out this morning, and while it sounds dreadful, it's actually an improvement over recent months. Frank Langfitt covers labor for NPR. He's in our Washington studio and joins us now. And Frank, how does today's number mean that the labor market is beginning to turn around?
FRANK LANGFITT: Well, this is the hope, Renee. And it looks like losses have really moderated. But it also says a lot about how bad our economy is, that we could lose over 500,000 jobs, and that could be seen as a good thing. The reality, though, is this is the first time we've seen job losses below 600,000 in about five months, so that's definitely an improvement. A few caveats, though. The unemployment rate just jumped up to about 8.9 percent. And private-sector job losses were still really big last month. One reason they don't look quite as bad is that government hiring was up about 72,000. A lot of that was census jobs. Last thing I just would mention to people as they're trying to follow this, there have been false bottoms before. May last year, it looked like losses were ebbing, and then it plunged again the next month.
MONTAGNE: Other than those census jobs or government jobs you just mentioned, why are the job losses slowing down now?
LANGFITT: Well, you know, a lot of employers have cut really deeply, about as deep as they can and continue to produce for the demand out there. There just isn't that much labor slack for a lot of businesses. The other thing, of course, as we've talked about before, this is a consumer-driven economy. Seventy percent of our gross domestic product comes out of that consumer spending. And there's signs that consumers are spending a bit more now. Wal-Mart last month, their sales were up about 5 percent. People cut back, really, a lot in their spending at the end of last year, and now there seems to be a little more confidence.
Now, some of this is clearly psychological. There's a guy I talked to, Nigel Gault - he's an economist at IHS Global Insight, an analysis firm - and he says this sort of positive attitude can help.
Mr. NIGEL GAULT (Economist, IHS Global Insight): I think psychology certainly does have an influence because it influences how far the economy falls. It doesn't cure the underlying problem. So that's going to take a long time.
MONTAGNE: Well, let's talk about that. The nation has already lost 5.7 million jobs since the recession began at the end of 2007, still losing jobs. How long will it take until we start actually adding jobs?
LANGFITT: Well, it's going to take a while. I mean, even if this is the beginning of a turning point, most analysts say maybe jobs could pick up at the end of the year, around Christmastime. Others say well into 2010. Larry Michel runs the Economic Policy Institute. It's a think tank that focuses on working people. And he says even as people see signs of hope, they need to be realistic about all this.
Mr. LARRY MICHEL (Economic Policy Institute): It's normal for people to be looking for the turnaround, for something that indicates a change in trend. What's, I think, important to keep your eye is that the trend is that we've lost a tremendous amount of jobs. We have a deep job hole. The hole is getting bigger and bigger.
MONTAGNE: And that is possibly to be expected, following the last recession, which began in 2001. There was what's called a jobless recovery, and that meant the economy improved, but it took a long time for hiring to pick up. Why does that happen?
LANGFITT: Well, businesses take time to add staff. They're nervous and unsure, just like everybody else. And so what they might first do is add hours to the workers they already have before doing a lot more hiring. Or they might hire temp workers, just to be careful. So the economy could grow slowly, but for a lot of people, it could still feel like we're in a recession. You may also see something like this coming as we get into a recovery now, though not as extreme in the past because we've already had such big layoffs.
MONTAGNE: And Frank, finally, looking past his report, are there more big job losses that you would know are coming?
LANGFITT: Well, we do. I mean, as you know, I also cover the auto industry for NPR, and that's where we're going to see a lot. I was out at union halls in Detroit last week, and workers are just bracing for more hits. Chrysler, as you know, it's in bankruptcy. They're going to be shutting down six plants by the end of next year. General Motors, they're trying to stay out of bankruptcy. But they just announced they lost $6 billion in the first three months of this year, and they're also going to try to cut about 21,000 factory jobs. So you're going to still see a big shakeout in the auto industry, and that's going to show up in these reports. And frankly, those are good-paying jobs. A lot of those people make about 28 bucks an hour.
MONTAGNE: NPR's Frank Langfitt. Thanks very much.
LANGFITT: Happy to do it, Renee.