- The Washington Times - Saturday, March 8, 2003

American businesses cut 308,000 jobs last month in the most extensive job slashing since November 2001 in the wake of the September 11 terrorist attacks, the Labor Department reported yesterday.
The sizable employment drain in three of the past four months more than offsets meager job gains seen earlier last year and raises the possibility that the economy is falling back into recession, analysts said.
The job losses last month were widespread, from manufacturing and construction to services and retail trade. Only the government and a smattering of industries, including health care and mortgage lending, added to the job pool during the month.
"The labor market situation has deteriorated dramatically and is weighing heavily on consumer confidence and spending," said Richard Yamarone, economist with Argus Research Corp.
Although the job losses nudged the unemployment rate up a fraction to 5.8 percent and were accompanied by a sizable 0.7 percent gain in wages, the threat to jobs is the overriding menace that caused consumer confidence to take its biggest tumble since the terrorist attacks last month, he said.
Several one-time factors took their toll on the job market, including the Code Orange terror alert, snow in the East Coast and an impending war with Iraq.
Those factors contributed to a 48,000 loss of construction jobs and an 85,000 loss of jobs at restaurants, economists said.
Also, about 90,000 of the job losses may have been the result of the government's activation of military reservists, economists estimated. The department instructed businesses to leave reservists' positions out of their job totals last month.
Although some of those losses could be reversed in the future, they still left much of the month's job losses unaccounted for, Mr. Yamarone said, and do not explain the widespread weakness seen elsewhere.
"This weak labor report raises the potential for a double-dip recession," he said.
The National Bureau of Economic Research, the Boston research group that officially determines the beginnings and ends of recessions, places particular importance on the monthly jobs figures published by the Labor Department.
Although it has taken note of weakness seen in earlier jobs reports, the group's panel of economists had no immediate comment on yesterday's report.
Mark Vitner, economist with Wachovia Securities, said last month's bad weather does not explain the job losses, because the big snowfall occurred in the week after the department's survey of businesses. The effect from the storm is more likely to be seen in next month's report, he said.
The flagging jobs picture is conspiring with high energy prices to depress consumers and the larger economy, with cutbacks in travel, lodging and discretionary purchases particularly acute, he said.
Gasoline prices surged 15 percent in the past month and are "exacting a real toll on overall economic activity," he said, noting that "those higher prices work just like a tax increase, leaving consumers with less money to spend on everything else."
With more than a half-million manufacturing jobs disappearing in the past year, and an additional 380,000 private-sector jobs down the drain, the recent recession and jobless recovery are starting to look like some of the worst in modern history, said Charles McMillion, economist with MBG Information Services.
The jobs outlook is particularly bleak for the one in five unemployed people who have been out of work for six months or longer, said Maurice Emsellem of the National Employment Law Project.
"Not only is long-term unemployment showing no signs of subsiding, it's now clear that the problem is reaching more deeply and broadly into all corners of the labor market while jobs disappear in alarming numbers," he said.
Yesterday's job losses sparked speculation that the Federal Reserve will slash interest rates soon to forestall a dip back into recession.
The yields on Treasury bills dropped in anticipation of a Fed rate cut, while stocks and the dollar dropped on the poor employment news when it was released yesterday morning. The Dow Jones Industrial Average bounced back, closing up 66 points.
Fed Chairman Alan Greenspan revealed no particular alarm in unusual off-the-cuff remarks he made about the economy yesterday, however.
"The American economy has been able to struggle along without collapsing into a much deeper recession," despite big jolts from the terrorist attacks, the three-year stock market slide, corporate scandals, high energy prices and the impending war with Iraq, he said in a question-and-answer session after a speech delivered by satellite to bankers in Paris.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide