Another Grim Jobs Report: Just A Bump In The Road?
JACKI LYDEN, host:
The economy got some bad news yesterday. The Labor Department said that unemployment rose to 9.8 percent in September. That's worse than expected, and it suggests the road to recovery may be longer than many economists thought. NPR's Chris Arnold reports.
CHRIS ARNOLD: Federal Reserve Chairman Ben Bernanke recently said that the recession is likely over. But he cautioned that it's not going to feel like that to many Americans for a while and this latest jobs reports proves that -15 million Americans are now out of work, one in six people are underemployed -and it doesn't look like that's going to better any time soon.
Mr. DAVID KOTOK (Chief Investment Officer, Cumberland Advisors): What's troubling about this report is that the forward-looking information is not healthy or positive.
ARNOLD: David Kotok is chief investment officer at Cumberland Advisors. He says that, for example, many people are working fewer hours a week, which suggests that companies are not going to start hiring much yet if they can just give their current workers more hours. Also, he says that more people are discouraged and not even looking for work.
All of this is bound to be a drag on consumer spending, the housing market, the whole economy.
Mr. KOTOK: When it comes to this economic recovery it is going to be slow, the growth rates will be tepid and the workout in the labor side, job side, is going to take years and years. And that is likely to be the case right through to the next presidential election.
ARNOLD: President Obama said yesterday that employment is often the last thing to come back after a recession. But the president said he is exploring additional measures to promote job creation.
President BARACK OBAMA: And I want to let every single American know that I will not let up until those who are seeking work can find work.
ARNOLD: Meanwhile, David Kotok says this disappointing jobs report makes economists worry at least a little bit more than the economic recovery might fizzle. This is the fear of the so-called W-shaped recession, where things start to turn up by go down again into a second dip.
Mr. KOTOK: If we had a couple of more months like this, then the answer would be yes, we're headed into the W. The dreaded W is happening.
ARNOLD: Still, on the brighter side, the pace of job losses is slowing. Stuart Hoffman is chief economist of PNC Financial Services Group. He says that lately the economy's been losing around 250,000 jobs a month. That's bad, but much less bad than earlier this year.
Mr. STUART HOFFMAN (Chief Economist, PNC Financial Services Group): In the second quarter it was about 450,000 jobs per month, and in the awful, awful first quarter, the opening quarter of this year, we were losing over 700,000 jobs per month.
ARNOLD: Hoffman's more optimistic than some. He thinks we'll start to see some job gains early next year. Also, his bank just completed a survey of small business owners. Only half as many are expecting layoffs, as compared to six months ago, and they're getting a bit more confident about the future.
Mr. DIETER WEISSENRIEDER (Founder, Weiss-Aug, Inc.): And I tell you, last month we had a terrific month.
ARNOLD: That's Dieter Weissenrieder, the founder of Weiss-Aug, Inc., a metal parts manufacturing company in New Jersey. The company makes parts for medical devices, including certain types of syringes. Earlier this year, the company had some layoffs but things are looking better now.
Mr. WEISSENRIEDER: I hate to say that, but the swine flu has definitely helped us.
ARNOLD: But Weissenrieder says he's also seeing business pick up from lots of different sources. He says car manufacturers, electronics companies and others have new products that they have developed during the recession but they got put on the shelf until the economy started to look better.
You're starting to see some of that…
Mr. WEISSENRIEDER: Yep.
ARNOLD: …getting made now or…
Mr. WEISSENRIEDER: Absolutely, yes. I mean, that's the new type, new work that I'm seeing right now.
ARNOLD: Other business owners aren't so optimistic, but everyone's watching the data to see what course the economy is charting on this slow journey towards a recovery.
Chris Arnold, NPR News.
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