- The Washington Times - Sunday, May 4, 2003


  Unemployment last month rose to 6 percent as businesses cut jobs for a third straight month, the Labor Department reported yesterday.
  Job losses in the last three months have totaled more than a half-million and have become the biggest drag on the struggling economy. The string of job losses is unusual and has never occurred outside of a recession.
  As unemployment returned to the highest rate in eight years from 5.8 percent, businesses slashed a net total of 48,000 jobs in April.
  That was somewhat less than economists were expecting, thus helping fuel a rally on Wall Street yesterday. The Dow Jones Industrial Average rose 128 points to 8,583.
  “A weak job market has been a pernicious weed in the general economic outlook,” said Lynn Reaser, chief economist with Banc of America Capital Management. “Questions persist as to when signs of better economic growth will emerge.”
  Much of the problem lies with businesses, which remain reluctant to spend and hire even in the aftermath of the war, she said. But Ms. Reaser is hopeful the economy will slowly turn the corner in the months ahead.
  “With the abatement of many external shocks — including Iraq, North Korea, terrorism and even SARS — business confidence and spending should start to pick up.”
  The 6 percent unemployment rate is a “clear signal” that the country needs a “bold economic recovery package so people can find work,” President Bush told employees at a United Defense Industries Inc. plant in Santa Clara, Calif., that makes the Army’s Bradley Fighting Vehicles that made the dash to Baghdad a month ago.
  “That 6 percent should say loud and clear to both political parties of the United States Congress that we need robust tax relief so our citizens can find a job,” the president said.
  Manufacturing workers were hardest hit during the month, with the loss of 95,000 jobs, reflecting layoffs at automakers, steel plants and electronics manufacturers.
  The manufacturing workweek and overtime hours also were cut, as the factory sector plunged back into recession after a brief recovery last fall.
  Cuts in hours and jobs also were pronounced in the tourism business. Amusement and recreation services lost 41,000 jobs, hotels cut 20,000 jobs and air transport chopped 18,000 positions. Retailers trimmed employment by 10,000.
  Weekly paychecks also fell during the month because of a fall in the average workweek from 34.3 to 34 hours, combined with a 0.1 percent increase in average hourly earnings.
  Among the few bright spots in the jobs report was a surge of 32,000 in state and local hiring and an 18,000 increase in construction jobs, fueled by the booming housing market.
  “The plunge in hours does suggest that activity came to a standstill, or even contracted, during the war,” said Jade Zelnik, chief economist at RBS Greenwich Capital Markets.
  Fighting was continuing in Iraq when the department conducted its employment surveys at the beginning of April, although victory by the United States and its allies was imminent and widely predicted.
  Analysts have been hoping the steep drop in economic activity caused by anxiety and uncertainty in the buildup to the war would dissipate quickly afterward. But so far only consumer confidence and oil prices have bounced back close to prewar levels.
  Federal Reserve Chairman Alan Greenspan and other economists nevertheless advise patience and remain hopeful that, given a little more time, signs of life will re-emerge in the economy. The Fed meets on Tuesday to consider whether more cuts in interest rates are needed to prop up growth.
  April’s weak jobs report “doesn’t rule out a gradual postwar improvement,” like the one Mr. Greenspan said he was expecting in testimony Wednesday, Ms. Zelnik said.
  As each month passes and no new jobs are created, the time it takes unemployed workers to find jobs grows longer. Last month, the average length of unemployment jumped from 18 weeks to 19.6 weeks, or almost five months — the highest in 20 years.
  The number of people filing new claims for unemployment insurance has hovered around 450,000 a week recently. The deepening joblessness has forced Congress to repeatedly lengthen the six-month period for which workers are eligible for unemployment benefits.
  Congress approved a 13-week extension of benefits at the beginning of the year, but that expires at the end of this month, potentially leaving nearly 2 million workers without benefits.
  “For the last two years, stubbornly high long-term unemployment has been the most consistent feature of the sputtering economy,” said Maurice Emsellem, director of the National Employment Law Project.
  “President Bush and congressional leaders are talking nonstop about tax cuts,” but have given no clue as to whether they will move to extend jobless benefits again, he said.
  

LOAD COMMENTS ()

 

Click to Read More

Click to Hide