80,000 Jobs Cut; Economic Outlook Bleak
The unemployment rate has begun to rise. The most recent employment report released by the
Department of Labor this morning showed that the economy has suffered another huge loss, 80,000 jobs, last month. The unemployment rate is now 5.1%, which is up from last month’s 4.8%.
As of the March report, 7.8 million people in the United States are now unemployed. Major losses were in the industries of construction, manufacturing and professional and business services. Construction lost 51,000 jobs, manufacturing lost 48,000 jobs, and professional and business services lost 35,000. Other losses were in retail. These included building materials, garden supplies and home furnishing stores.
Health care jobs and food services are the two major industries that continue to show increases in employment on a steady basis. Each acquiring 23,000 jobs in March.
This is bad news for Wall Street, who had higher hopes earlier this week. This was before Federal Reserve Chairman Ben Bernanke offered a rather bleak economic outlook to Congress. There are some highlights from Wednesday’s testimony:
Although our recent actions appear to have helped stabilize the situation somewhat, financial markets remain under considerable stress. Pressures in short-term bank funding markets, which had abated somewhat beginning late last year, have increased once again.
The effects of the financial strains on credit cost and availability have become increasingly evident, with some portions of the system that had previously escaped the worst of the turmoil–such as the markets for municipal bonds and student loans–having been affected.
Concerns about employment and income prospects, together with declining home values and tighter credit conditions, have caused consumer spending to decelerate considerably from the solid pace seen during the first three quarters of last year.
Overall, the near-term economic outlook has weakened relative to the projections released by the Federal Open Market Committee (FOMC) at the end of January. It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly.
Inflation has also been a source of concern.
 Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year. I remain confident in our economy’s long-term prospects.
