Economy Hasn't Hit Bottom, Yet

More bad news for the economy this week: A new report showed more than a half-million American jobs lost in November alone — the most since 1974. Meanwhile, a report says 1 in 10 homeowners with mortages are a month behind in payments or already in foreclosure. And automakers are begging for financial help.

Copyright © 2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ANDREA SEABROOK, host:

From NPR News, it's All Things Considered. I'm Andrea Seabrook. Shockingly weak, truly horrific, indescribably terrible - that's how various economists described yesterday's unemployment numbers. They showed more than half a million American jobs lost in November alone. NPR's economics correspondent John Ydstie is here. And, John, is it really that bad?

JOHN YDSTIE: Well, it's pretty bad. 533,000 jobs lost, the worst numbers since 1974. And in addition, the labor department said that 200,000 more jobs were lost in September and October than had been previously reported.

SEABROOK: And that's just the headline here.

YDSTIE: That's just the headline. There are actually an additional group of people who work part time who want to get a full time job, or people who've looked for a job are discouraged now. They're not counted in the unemployment statistics. The number of people in those categories went up by a million people, more than a million people in November. And if you add them into the unemployment rate, we'd get a much higher rate than the 6.7 that was reported yesterday.

SEABROOK: So, is this the bottom, John? Let's hope so.

YDSTIE: Well, I don't think it is. Most forecasts suggest that the economy is going to continue to shrink quite rapidly into next year, maybe begin to recover toward the end of the year. And a lot of economists are predicting unemployment rising to eight percent. Some are now saying up to 10 percent, which would rival the very deep recession of the early 1980s.

SEABROOK: I understand there was a report out yesterday from the Mortgage Bankers Association that had this incredible statistic in it. It said one in 10 homeowners with mortgages are a month behind in payments or already in foreclosure.

YDSTIE: Yeah. That's a scary number. And I think it's likely to get worse as unemployment rises. Democrats continue to try to pressure the Bush administration to do more to help struggling homeowners. And there's some hope among Democrats that if the administration comes back to ask for the second half of this $700 billion TARP program, which it wants in case there are more failures in the financial industry, that the Congress will be able to force the administration to spend some of that money helping homeowners.

SEABROOK: Speaking of Congress, John, the last couple of days, the heads of the Big Three automakers have been before Congress begging for $34 billion from the federal government. Are they going to get anything close to that?

YDSTIE: Well, I think they're going to get some of it. I think the big job loss numbers in November kind of focused the Congress and the White House on the dire consequences of allowing the auto companies to fail. So, Congress and the White House have agreed now to write legislation over this weekend that could be voted on next week. The outlines suggest that the auto companies would get $15 to $17 billion to keep them operating through March, until the new president and the new Congress come in, and then they'll have to deal with the situation.

SEABROOK: So, about half of what they're asking...

YDSTIE: About half of what they're asking for...

SEABROOK: Get them into the new year.

YDSTIE: But there's still a question of whether the Congress will pass it. I mean, there's still a lot of opposition in Congress to this.

SEABROOK: NPR's John Ydstie. Thanks very much, John.

YDSTIE: You're very welcome.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

November U.S. Job Losses Highest Since 1974

Edward Stewart Jr. looks for a job at an employment center in Kansas City, Mo. i i

Edward Stewart Jr., 48, looks for a job at an employment center in Kansas City, Mo. Frank Morris for NPR hide caption

itoggle caption Frank Morris for NPR
Edward Stewart Jr. looks for a job at an employment center in Kansas City, Mo.

Edward Stewart Jr., 48, looks for a job at an employment center in Kansas City, Mo.

Frank Morris for NPR
Job seekers register at a job fair attended by thousands Nov. 13 in Hialeah, Fla. i i

Job seekers register at a job fair attended by thousands Nov. 13 in Hialeah, Fla. Robert Sullivan/Getty Images hide caption

itoggle caption Robert Sullivan/Getty Images
Job seekers register at a job fair attended by thousands Nov. 13 in Hialeah, Fla.

Job seekers register at a job fair attended by thousands Nov. 13 in Hialeah, Fla.

Robert Sullivan/Getty Images

The U.S. economy shed jobs at a blistering pace in November, pushing the overall unemployment rate to 6.7 percent and putting new pressure on federal officials to approve another big stimulus package sometime soon.

Employers cut 533,000 jobs from their payrolls during the month, the worst decline since December 1974 and a much bigger drop than economists had predicted.

Companies also eliminated more jobs than first thought in September and October. That brings total job losses since the recession began in December 2007 to about 2.7 million, according to the Labor Department.

"Today's employment report reflects the difficulties in our economy. It is devastating when Americans lose their jobs, and many are worried about their future job security," said Commerce Secretary Carlos Gutierrez.

"These are really God-awful numbers. The economy's headed downhill and really the brakes are not working," said Sung Won Sohn, professor of economics and finance at California State University, Channel Islands.

Nearly every sector of the employment market lost jobs, including manufacturing (85,000), professional and business services (101,000), and leisure and hospitality (76,000). Unemployment rose for both adult women (5.5 percent) and adult men (6.5 percent).

"Right now I would take anything; I'd go down to $6 or $7 [an hour] just to have a job," says Ray Ross of Nashville, Tenn., who was recently laid off from his job as a security guard. His former employer has put him on call, but he isn't getting much work.

The retail sector lost 91,000 jobs, with auto dealers alone down by 24,000, underscoring the way Detroit's troubles are filtering through the broader economy. The drop comes in a week when officials of the big U.S. automakers are on Capitol Hill seeking financial assistance, and it is likely to make it harder for Congress to turn them down.

As high as it appears, the 6.7 percent unemployment rate actually underestimates the number of people hurt by the declining jobs market, because it doesn't include people who have given up searching for work or part-timers who would like to work full time, Sohn said. The report says more than 400,000 people left the labor market this year because they believe no jobs are available, he said.

Forty-eight-year-old Edward Stewart Jr., of Kansas City, Mo., has been subsisting on day jobs and occasional temporary gigs, but he would prefer to work a full week.

"Right now, I'm searching the Web and trying to make some phone calls and trying to get some work for like a janitorial service maybe, whatever comes up," he says.

In addition, the Labor Department estimates that about 600,000 workers have simply stopped looking for jobs, up from about 259,000 a year ago.

When these two groups are included, the effective unemployment rate is actually much higher than it appears, about 12.5 percent, Sohn says.

November's big drop puts new pressure on the incoming Obama administration and Congress to approve an economic stimulus package as quickly as possible. The president-elect has talked about a plan to create 2.5 million new jobs, at least in part by funneling money to the states to pay for large infrastructure projects.

"The jobs picture painted today is staggering, and it should be all the evidence Washington needs to act swiftly and decisively to shore up this economy," said Sen. Charles Schumer (D-NY).

Bush administration officials tried to sound a more optimistic note, saying the financial rescue package put into place by the Treasury Department would ultimately help the job market. U.S. officials have taken a number of steps to try to stabilize the financial system, such as buying stock in major banks and guaranteeing certain kinds of securities.

"it's going to take time for all the actions we've taken to have their full impact, but I am confident that the steps we're taking will help fix the problems in our economy and return it to strength," said President Bush, meeting with reporters at the White House today.

"My administration is committed to ensuring that our economy succeeds, and I know that the incoming administration shares the same commitment," he added.

The gloominess of the report sent stock prices down sharply early in the day, but they later rebounded. The Dow Jones industrial average rose by 259 points, finishing at 8635.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.