America Loses 23,000 Jobs Every Day
Output suffers biggest slump in 25 years
By Gráinne Gilmore, Economics Correspondent
March 07, 2009 "The Times" -- -American businesses were forced to shed more than 23,000 jobs every day last month as recession tightened its grip on the economy, pushing the unemployment rate to a 25-year high.
The rate jumped from 7.6 per cent to 8.1 per cent, the highest level since the downturn of the early 1980s. The US economy has lost 4.4 million jobs since the beginning of the slowdown, with more than half of these positions disappearing in the past four months alone.
While the loss of 651,000 non-farm jobs in February was broadly in line with analysts' expectations, drastic revisions to the level of cuts in earlier months indicated that the employment market had been hit much more severely than had been previously thought.
Job losses in January were revised sharply to 655,000 from 598,000, while revised estimates for unemployment in December showed that 681,000 workers were laid off, the worst month on record since October 1949.
The dire numbers came only a week after figures for gross domestic product were radically revised down to show that the United States had suffered the biggest slump in a quarter of a century in the final three months of last year.
In a further sign of the struggles that are facing workers in America, the number of people forced into part-time work because their hours were cut or they were unable to find full-time work rose by 787,000 to 8.6 million last month. Yet despite the gloomy figures, analysts drew hope from evidence that the pace of job losses was easing.
Paul Ashworth, US economist at Capital Economics, said: “Another terrible set of labour market figures — there is just the slightest glimmer of hope that conditions may be improving.”
Robert MacIntosh, chief economist at investment firm Eaton Vance, disagreed and called the figures “ugly”, adding that since unemployment was often a lagging indicator, recovery may not be on the cards until next year.
The unemployment data prompted President Obama to highlight the jobs that he claims to have been saved by his $787 billion economic stimulus package. Speaking in Ohio, Mr Obama admitted that joblessness is “a future that millions of Americans still face right now”, but he added that it was “not a future I accept for the United States of America”.
This came as the International Monetary Fund (IMF) gave warning that the world's biggest economies needed to take urgent action to address their precarious longer-term finances. It said that many countries would have to boost spending even further to stave off the worst ravages of the recession but that this needed to be balanced against the risk of a “loss of confidence in government solvency”.
While the IMF said that higher spending was warranted to combat a deepening recession, deteriorating government finances raised “issues of fiscal solvency and could eventually trigger adverse market reactions”. In particular, it warned that higher borrowing costs could add to government debts, “in some cases resulting in snowballing debt dynamics”.
In a paper published as part of its advice to finance leaders from the Group of 20 rich and developing nations, which is meeting next week, the IMF said: “This scenario would be deleterious for global growth. Balancing these risks will be challenging but the trade-off can be improved if governments clarify, in a credible way, their strategy to ensure fiscal solvency.
“Indeed, greater clarity is urgently needed. The problem cannot simply be ignored.”
The IMF pointed out that many of the most developed countries were carrying the added burden of ageing populations, which would soon be putting even greater pressures on the public finances.