Businesses cut 199,000 jobs in September, government reports

Copyright APonline

By MARTIN CRUTSINGER, Associated Press

WASHINGTON (October 5, 2001 9:09 a.m. EDT) - The nation's unemployment rate remained stuck at 4.9 percent in September as American businesses shed 199,000 jobs last month. It was the largest job loss in more than a decade.

The Labor Department's unemployment report released Friday showed that the labor market was under intense pressure even before the Sept. 11 terrorist attacks. Manufacturing companies laid off 93,000 workers last month, the 14th consecutive month of job losses at factories. Over that period, 1.1 million workers have lost their jobs.

Because of the way the government gathers the employment statistics, the September report captured none of the more than 200,000 layoffs in the airline and travel industries that occurred after the attacks. Those layoffs will show up in the October jobless report.

Many economists are predicting that the unemployment rate in October could surge to 5.3 percent or higher because of the widespread layoffs that have already occurred.

The September jobless rate of 4.9 percent was the same as the August level, with both months showing unemployment now at the highest rate since the country entered the year-long economic slowdown last summer. Unemployment last year had fallen to a three-decade low of 3.9 percent.

The unemployment rate, which is based on a survey of American households, remained unchanged in September even though a separate survey of businesses showed the sharp reduction in non-farm payroll jobs. Over time, the two surveys generally reflect the same trends.

Many economists are predicting that the shock of the terrorist attack will push the country into a full-blown recession, the nation's first downturn since the 1990-91 slump, which occurred in part because of the economic disruptions from skyrocketing oil prices after Iraq invaded Kuwait.

President Bush, whose father was in the White House during the last downturn, is working with Congress to fashion an economic stimulus program of as much as $75 billion in an effort to make sure that any downturn will be mild and brief.

However, Democrats in Congress have complained that the administration wants to tilt the stimulus package too much in favor of tax cuts for the wealthy. They are seeking bigger increases in benefits for low-income workers and those who have been laid off as a result of the terrorist attacks.

For September, the drop of 199,000 payroll jobs was the largest one-month decline since payroll jobs fell by 259,000 in February 1991, when the country was mired in the last recession. Payrolls had fall by 84,000 in August.

The 93,000 jobs cuts in manufacturing included big losses at factories making industrial machinery and electrical equipment, which have accouned for nearly two-fifths of the manufacturing jobs cut this year. Manufacturing has been the hardest hit part of the economy during the slowdown.

The Federal Reserve cut interest rates for a ninth time on Tuesday, a half-point cut which drove a key rate to its lowest point in nearly 40 years. Before the September terrorist attacks, many economists believed the worst of the economic slowdown was coming to an end. They were forecasting a solid rebound in the last part of this year that would keep the country out of a recession.

However, those forecasts have been marked down significantly since Sept. 11 as the nation's airlines were shut down. Even after air travel resumed, airlines reported that many planes were only half full as Americans cancelled travel planes because of fears of further terrorist hijackings.

Many economists believe that overall economic growth, which slowed to a barely discernible 0.3 percent rate in the April-June quarter, entered negative territory in the just completed July-September period. They are forecasting declines in the gross domestic product of 1 percent in both the third and fourth quarters this year.

Economists' biggest concern is that consumer spending, which accounts for two-thirds of total economic activity, will drop off sharply as Americans cut back on purchases because of their worries about losing a job and the rising uncertainty as the American military builds up for a war against terrorism.

http://www.nandotimes.com/special_reports/terrorism/economics/v-text/story/124165p-1306542c.html?printer

-- Martin Thompson (mthom1927@aol.com), October 05, 2001

Answers

It's amazing how their figures can show unemployment remaining the same after losing 199,000 jobs last month.

-- Ken (n4wind@sonic.net), October 05, 2001.

The "unemployment number" is the most manipulated and massaged "statistic" to ever come out of Washington...Note, if you work ONE hour during the week, you are "employed".

Duh !!!

-- Lael (Lael@sendthemalltoAllah.net), October 05, 2001.

What always gripes me is that there is never any explanation of what are unemployment numbers and what are unemployment numbers. Example: Boeing's announced 30,000 layoffs are spread out over the next 18 months. Same delayed, little by little layoff announcemets have been made by dozens of Fortune 500 companies over the past year. These are not fully showing up yet, but are in the cards, fooling so many people about the true nature of the unemployment picture.

-- Wayward (wayward@webtv.net), October 05, 2001.