Opinion

The Great Debate

What to expect from Friday’s jobs report

morici — Peter Morici is a Professor at the Smith School of Business, University of Maryland, and former Chief Economist at the United States International Trade Commission. The views expressed are his own. –

On Friday, the Labor Department will report employment data for May. In April, the economy lost 539,000 jobs, and the consensus forecast is for another 550,000 jobs lost in May. My forecast is for a 561,000 loss.

In Friday’s jobs report the key variables to watch are:

Jobs Creation. May 8 the Labor Department reported the economy lost 539,000 payroll jobs in April, down from 699,000 in March. However, a significant part of this improvement was a surge in temporary Census Bureau positions. The private sector still lost more than 600,000 jobs. In recent weeks, new unemployment claims have remained stubbornly above 600 thousand, and my forecast is 561,000 jobs lost in April.

Even if the economic contraction slows in the second and third quarters, job losses above 400,000 appear likely for the next several months. Job losses will top 7 or 8 million before the hemorrhaging ends.

The economy continued to contract at a 5.7 percent annual pace in the first quarter. The numbers would have been much worse but for a January surge in consumer spending.

Weak data for consumer spending and retail sales in February, March and April, notwithstanding, some analysts expect consumer spending to rebound soon.

An equal opportunity recession?

Jim CarrJames H. Carr is chief operating officer for the National Community Reinvestment Coalition, a Washington-based association that promote access to basic banking services for America’s working families. He is a member of the Insight Center for Community Economic Development’s “Experts of Color Clearinghouse”. The views expressed are his own.

The U.S. economy is unraveling at a pace not seen in decades. The more than 650,000 jobs lost last month has contributed to a growing concern that the unemployment rate could rise to 10 percent or higher before the economy rebounds. At the center of the economy’s instability is a foreclosure crisis that has claimed 3.5 million homes in the last year alone, and threatens the loss of an additional 8 to 10 million homes to foreclosure over the next five years.

The loss of wealth associated with the collapse of the housing market is staggering. More than $5 trillion in housing equity has virtually evaporated since the foreclosure crisis began. Major stock indexes have also been cut in half, further contributing to decreased consumer confidence, substantially reduced spending, lower productivity, rising unemployment and additional foreclosures.

Rising unemployment gravest threat to U.S. and UK

John Kemp Great Debate– John Kemp is a Reuters columnist. The views expressed are his own –

Rising unemployment is the now the largest single threat to attempts to stabilize the banking system through recapitalization and assets swaps designed to remove toxic assets from bank balance sheets.

It is also the main impediment to restarting bank lending, renewing output growth and preventing debt-deflation becoming entrenched.

from Ask...:

Reaction to shocking jobless data


November's job losses were the steepest since December 1974, when 602,000 jobs were shed. Analysts polled by Reuters had predicted a reduction of 340,000 jobs.

"This is a clear employment blowout. Firms are reacting as dramatically as they can to make sure they have cost structures they can survive the recession we are in," said Joel Naroff, president of Naroff Economic Advisors.

One reader commenting on the site feels the job losses have not hit bottom. "I predict 30% unemployment by March of 2009. The retailers are gonna tank right after Christmas. Look for some really good deals!" wrote Smacktle.

After victory, a reality check for Obama

diana-furchtgott-roth– Diana Furchtgott-Roth, a former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The opinions expressed are her own. —

By Diana Furchtgott-Roth

Pity President-elect Barack Obama. Today, only three days after his historic victory as the first African-American elected president, the Labor Department announced that the economy lost 240,000 jobs from payrolls in October and that the unemployment rate rose to 6.5%. This underscores the difficulties he faces in raising taxes on “the rich” to fund new spending.

Obama must recognize that his campaign promises are impossible to implement without making the economy sicker. The economy is weak and getting weaker, probably contracting now at an annual rate of 3-4 percent.

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