WASHINGTON — As the presidential election season nears its climax, there is growing evidence that the country is slipping into the deepest recession in decades.
The latest marker came Friday, when the government reported that employers shed 159,000 jobs in September, far more than expected. That was the worst one-month drop in more than five years and brings to 760,000 the number of jobs that have disappeared this year.
Economists say the accelerating pace of job losses, combined with the most severe credit crisis since the Great Depression, make it increasingly likely that the government bureau that determines business cycles will eventually stamp “recession” on this one.
“This should remove any lingering doubts that the economy is in a recession,” said Dean Baker, co-director of the Center for Economic and Policy Research. “The rate of job loss is accelerating and the unemployment rate is virtually certain to cross 7% early in 2009.”
Perhaps most telling was the reaction of Edward Leamer, director of the respected UCLA Anderson Forecast, who has repeatedly predicted that the country will narrowly skirt recession. He called the payroll decline “the first number that is really bothersome to me” and added, “August was probably the first recession month.”
August was when the unemployment rate jumped from 5.7% to 6.1%. That rate, calculated using a survey different from the one used to determine job losses, was unchanged at 6.1% in September. Economists took little comfort in that, however, pointing out that the jobless rate doesn’t count people who have given up looking for work, nor those who have had to settle for part-time work.
“Factoring in discouraged workers, unemployment is closer to 7.9%,” said University of Maryland economist Peter Morici.
LeAndrae Coates, a 37-year-old former optician, is trying to stay out of the ranks of the discouraged.
On Friday, he was working the computer job banks at an employment center in Lincoln Heights run by the Arbor Education and Training group. For the last six months, he’s been going to the job center four days a week, and he sends out about 10 job applications a week. In that time, he’s gotten only one in-person interview.
Coates said hiring managers have told him that they’re accepting only part-time workers because they can’t afford to pay full time. He now regrets leaving a part-time job as an optician for an eyeglass company in search of full-time work.
“The problem with this economy is different now than when I first started in the workforce,” Coates said. “It’s harder to get a job lately, and a lot of companies are downsizing.”
The economy’s fate is bearing down on the presidential contest, with Americans telling pollsters that economic recession is their top concern. Both major candidates — Republican Sen. John McCain and Democratic Sen. Barack Obama — addressed job losses from the campaign trail.
Speaking in a windy high school football stadium in Abington, Pa., Friday, Obama contended that the loss of payroll jobs was a direct result of the economic philosophy embraced by McCain and the Republican administration.
“This is the economy that my opponent said made ‘great progress’ under the policies of George W. Bush, and those are the economic policies that he proposes to continue another four years,” Obama said. “So when Sen. McCain and his running mate talk about job killing — that’s something they know a thing or two about.”
McCain, in turn, blamed entrenched politicians in Washington and greedy interests on Wall Street for the nation’s economic turmoil, and told supporters in Pueblo, Colo., that the consequences were most dire for hardworking Americans like themselves.
“No one in this room doesn’t know someone that’s struggling to keep their job, their home, their healthcare, educate their kids,” he told thousands packed into a town hall at the Massari Arena at Colorado State University’s Pueblo campus. “There’s no one in this room that doesn’t know that this is the most severe financial crisis we have faced in our lifetime, and there’s no easy answers to it.”
“Our first goal and our only objective is to help Main Street, not Wall Street and not the corruption and evil that’s in Washington, D.C., either,” he said.
The unexpectedly high job losses — many analysts had expected the number to be closer to 100,000 — came on the same day that the House of Representatives successfully passed the $700-billion rescue plan for the financial system. Despite that vote, stocks declined Friday, in part because of anxiety over the economy.
The grim employment picture also triggered speculation that the Federal Reserve would attempt to pump some adrenaline into the faltering economy soon by lowering its benchmark interest rate, now at 2% — perhaps acting even before its regularly scheduled meeting at the end of the month.
“With all economic signs flashing recession, we expect a 0.5% rate cut from the Fed this month,” said Peter Kretzmer, senior economist at Bank of America Corp. in New York.
By Maura Reynolds and Tiffany Hsu, Los Angeles Times Staff Writers
October 4, 2008
Source: Los Angeles Times