September Job Losses Underscore Depth Of Crisis Job losses mounted in the September unemployment report. The Labor Department says businesses cut 159,000 jobs from their payrolls. That's a lot worse than in July and August, a trend that has many economists concerned.
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September Job Losses Underscore Depth Of Crisis

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September Job Losses Underscore Depth Of Crisis

September Job Losses Underscore Depth Of Crisis

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This is All Things Considered from NPR News. I'm Robert Siegel.

There was bad news on the job market today. The economy lost nearly 160,000 jobs in September. That's the biggest monthly drop this year. And like the job market, the number of economists who believe the US might still be able to avoid recession is shrinking as well. In fact, some say the economic problems are so serious now that the government's best hope is just to contain the damage, as NPR's Frank Langfitt reports.

FRANK LANGFITT: Here's what economists were saying after the jobs numbers came out this morning.

Mr. STUART HOFFMAN (Economist, PNC Financial): And then, yeah, it's pretty depressing.

Mr. GUS FAUCHER (Economist, I'm not scared, but I certainly am anxious.

Ms. DIANE SWONK (Economist, Mesirow Financial): I am frightened.

LANGFITT: That was Stuart Hoffman of PNC Financial, Gus Faucher at, and Diane Swonk with Mesirow Financial. And there were at least two things that worried them about today's report. First, layoffs that began in troubled sectors like housing and construction are now everywhere. Stuart Hoffman explains.

Mr. HOFFMAN: We are seeing the job loss spread out now into areas it wasn't in particularly in retail trade, even leisure and hospitality, meaning a lot of restaurants and hotels.

LANGFITT: The other worry about the job loss in September is the volume. In a year when the nation has lost jobs every month, this was by far the worst. In fact, the last time the country saw such a steep decline was toward the end of the last recession, more than five years ago. Gus Faucher says the economy is so weak now, there are limits to what the government can do.

Mr. FAUCHER: And even with the bailout, the economy's likely to be in recession into 2009. What it will do is limit the damage, so instead of seeing, you know, two or three million job losses, we'll see job losses of maybe a million or a million and a half.

LANGFITT: In today's report, the unemployment rate remained steady at 6.1 percent, but most economists expect it will rise. The nation's employment problem began with the housing slump. Diane Swonk says a new culprit is emerging, the credit crunch. And it may affect workers in indirect ways. For instance, Swonk predicts tighter credit will make it harder for stores to offer customers no-interest loans for furniture and TVs.

Ms. SWONK: Many of the retailers that offered the zero percent financing so you could buy a big-ticket item, they are not in a position now to offer those kinds of deals during the holiday season.

LANGFITT: She says that will mean fewer sales and eventually, fewer jobs at the companies that make those items. John Silvia is an economist with Wachovia. He describes the relationship between credit and jobs simply: If one contracts, the other will, too.

Mr. JOHN SILVIA (Economist, Wachovia): You know, labor is combined with capital. If you cannot get, you cannot finance that capital, you don't add workers to a machine you don't have.

LANGFITT: Amid the gloom, economists do find some hope. The government recognizes the problem. And Diane Swonk says it's acting far faster than officials did before the Great Depression. In recent weeks, the Fed has moved to prop up the banking system and the Treasury Department is targeting toxic securities that are clogging up the credit markets.

Ms. SWONK: The bad news is, this is serious. The good news is, the understanding of it, of how to get out of it, of how to move forward, is much greater than it was. We are actually learning the lessons of the past. I don't think there's any denial left in Washington or there shouldn't be on Main Street about where we're at today.

LANGFITT: Swonk says government action won't stave off a recession. But she thinks it could make it shorter and a lot less painful for the country. Frank Langfitt, NPR News, Washington.

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