Heavy Job Loss Prompts Stimulus Criticism
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The surprising loss of 467,000 jobs in June, far more than expected, is fueling Republican criticism of the Obama administration's stimulus program. President Obama, for his part, called the huge job losses sobering after they were announced yesterday.
NPR's John Ydstie has more.
JOHN YDSTIE: The elimination of 467,000 jobs from payrolls in June followed a much smaller loss of 322,000 jobs in May. That smaller number had been viewed as a hopeful sign that the economy might be bottoming out. Some also saw it as the first glimmer of evidence that the big government stimulus package was beginning to work. Yesterday's employment report dashed those hopes. Republicans chose the occasion to release an online video featuring a bloodhound trying to sniff out any jobs produced by the president's stimulus package.
(SOUNDBITE OF ONLINE VIDEO)
AIG: We went to AIG, where the stimulus meant big bonuses for big executives, but no new jobs.
YDSTIE: Actually, AIG got TARP money, not money from stimulus package. But it was just a light hearted video, said House Minority Leader John Boehner, who appeared in the final scene with the bloodhound.
(SOUNDBITE OF ONLINE VIDEO)
JOHN BOEHNER: This is Ellie Mae. She hasn't found any stimulus jobs yet, and neither have the American people. It's time to stop runaway spending in Washington and help small businesses get the economy running once again.
YDSTIE: The Obama administration claims the stimulus has created or saved hundreds of thousands of jobs since it was enacted. That's impossible to document. Yesterday, the president said that his administration had taken what he called some extraordinary measures to blunt the hard edges of the worst recession of our lifetime.
BARACK OBAMA: But as I have said for the moment that I walked into the door of this White House, it took years for us to get into this mess, and it will take us more than a few months to turn it around.
YDSTIE: The task of the turning the economy around has gotten even more difficult as the unemployment rate continues to rise. It now stands at nine- and-a-half percent. It's the highest level since 1983, with six-and-a-half million people out of work. Nicolas Retsinas, who's the director of Harvard University's Center for Housing Studies, says one of the big challenges the economy faces is the negative feedback loop that has developed between continuing job losses and the decimated housing sector.
NICOLAS RETSINAS: The continuing data on loss of jobs tells us we're going to have a continuing stream of foreclosures ahead.
YDSTIE: That's, of course, because many people who are out of work can't make their house payments. Retsinas predicts that by the end of the recession, the number of foreclosures could reach six million. But it's not just those experiencing the job losses and foreclosures that are affected, says Retsinas.
RETSINAS: Even if you haven't lost your job, reading about other people losing their jobs makes you worry about your job. If you're worried about your job, one of the things you're not going to do is spend money. And you're particularly not going to make a large investment in buying a home.
YDSTIE: And job losses followed by foreclosures produce another effect: falling home prices. That can make even people who keep their jobs and homes feel poorer and less likely to go shopping. And less consumer spending means less demand for goods and services, even more job losses and a slower recovery. Concerned that the bad job numbers may extend the recession hammered the stock market yesterday. The Dow Jones industrials lost 215 points. That's a 2.6 percent loss. The S&P 500 fell 2.8 percent.
John Ydstie, NPR News, Washington.
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