Unemployment Hits 15-Year High
MADELEINE BRAND, host:
From the studios of NPR West, this is Day to Day. I'm Madeleine Brand.
ALEX COHEN, host:
And I'm Alex Cohen. Coming up, some of the same companies that brought us the subprime mess are back. This time, they're selling government-backed mortgages. We'll hear why that could cause another housing crisis.
BRAND: But first, it's a clear sign that the recession we're in right now is getting worse. Last month, the economy lost 533,000 jobs. NPR's Chris Arnold is following this. He joins us now. And Chris, you know, we hear these economic numbers all the time, every month this report comes out. How big a deal is this?
CHRIS ARNOLD: Hi, Madeleine. Well, this is a very big deal, and this number is echoing around the world today, and it's not an exaggeration. This is the worst monthly jobs report that we've seen since 1974. I talked to one economist this morning - a very level-headed guy who I talk to a lot - and he said this number is horrible and it's scary, is the way that he described this. And it's not just the 533,000. If you go back, this report took another look at previous reports and revised them, and when you add it all together, the economy's lost almost 2 million jobs, and unemployment is now at 6.7 percent. Some economists say it could easily rise to above 9 percent over the next year.
BRAND: So Chris, how does this compare - this recession - how does it compare to other recessions?
ARNOLD: Well, in the early 1980s, we saw a 10.8-percent unemployment rate, so that would be worse than what some economists are predicting, but that was one of the worst recessions in the entire post-war period, you know, since World War II. And economists say this one could get that bad or worse. I mean, the economy's in this downward spiral rate now, and it's just hard to know where that's going to end.
BRAND: Well, let's talk more about that spiral. The economy keeps losing all these jobs. What's at the root of it?
ARNOLD: Well, there's a lot of causes, but probably the biggest is that before the recession even started, the banking system in this country, and probably the world, was in terrible shape, and money is still not flowing right to a lot of average people or businesses. You know, it's harder to get car loans right now, harder to get mortgages, credit cards, and all that results in less spending by people, and companies, too. I mean, if they can't get a loan, it's harder for them to hire people and you know - so, that results in job cuts. And then you get into this cycle where people get laid off and then there's even less consumer spending, so more people get laid off, and you know, it just continues.
BRAND: Mm-hm. And so what are economists saying is the best way to get out of this?
ARNOLD: Well, if there's any silver lining to this really terrible number that we got today, it's that this number is so bad that the government now probably has to just pull out all the stops and do whatever it can to get the economy recovering here as quickly as it can. And you know, things like - we're talking about a big stimulus package; if there was opposition to that, that's a very tough argument to make now. There won't be any tax increases for sure anytime soon. And the government could do other things. I mean, there's talk of offering 4 and a half percent loans on 30-year, fixed home mortgages for maybe all Americans and, you know, that would put hundreds of extra dollars in a lot of our pockets to go out and spend on the economy. The hope is that some big moves like that might help the economy pull out of its nose dive.
BRAND: NPR's Chris Arnold, thank you very much.
ARNOLD: Thanks, Madeleine.
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