The nation's employers eliminated 4,000 jobs in August, the Labor Department said yesterday, bringing an end to four years of uninterrupted job growth.
The employment report jolted the stock market because economists had predicted an August increase of about 110,000 jobs.
Notably, governments cut back in large numbers.
Construction and manufacturing were the hardest-hit industries last month, losing a combined 68,000 jobs. That offset hiring in education, health and retail. About 28,000 government positions were eliminated as well.
Those cuts in government positions at state and local levels come as a result of dips in sales and property taxes. People who can't pay their mortgages can't pay their property taxes either. The stampede of home equity loans to do home upgrades generated big sales tax revenues from building materials sales as did construction of new homes. All that has hit the skids. Lots of state and local governments are singing the deficit blues: Chula Vista California, the state of Maryland and its counties, Arizona, Indiana school districts, Florida, and Michigan are all wrestling with budget deficits. That just scratches the surface. Many more county and local governments are trying to cut back spending and the Republicans are fighting with the Democrats over whether to raise taxes. At the local and state level the differences between the two parties becomes clearer when spending increases suddenly outrun tax collections. This is a good time to write a letter to your state representatives and governor telling them to cut back on unnecessary spending. Otherwise expect your taxes to rise even as your job security goes down.
The unemployment rate didn't rise because over a half million people gave up trying to find jobs. Why do they reach helplessness seemingly so quickly? What is really going on here?
June and July payrolls were revised down by a combined 81,000.
The jobless rate held steady at 4.6%, near a six-year low, according to the separate household survey. But that was because 592,000 people left the work force.
Countrywide Financial, the nationís largest mortgage lender, said late yesterday that it would eliminate as many as 12,000 jobs, which would be the biggest round of layoffs in the troubled housing industry.
The August jobs decline is a "very serious" development, which indicates "the economy is struggling and very near, if not already in, recession," said economist Mark Zandi at Moody's Economy.com.
Merrill Lynch economist David Rosenberg offered an even more pessimistic take. "Today's employment report was very clearly the weakest of this cycle and vividly portrays a recession-bound economy."
Officially a recession doesn't start until the economy contracts for at least 2 quarters. But is the economy already contracting and are we already in those 2 quarters?
The 4,000 contraction in jobs is even worse than it looks because it comes while legal and illegal immigrants surge into the country. Natives are getting displaced on a massive scale by Hispanic immigrants.
Here are the August job numbers from the household survey:
- Total: -316,000 (-0.22 percent from July)
- Non-Hispanic: -584,000 (-0.46 percent)
- Hispanic: +268,000 (+1.32 percent)
More than a quarter of a million Hispanics found jobs in August, the largest monthly increase since March 2004, and the third highest since the start of the Bush Administration in 2001. Meanwhile, the nearly 600,000 reduction in non-Hispanic employment was the biggest hit this group took since April 2005.
This recession is going to elevate the battle over immigration. Unemployed people aren't going to be interested in the economic rationalizations of the supporters of large scale immigration.
|Share |||By Randall Parker at 2007 September 09 03:44 PM Economics Business Cycle|