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Unemployment Rate Jumps, Recession Looms

The economy is not as healthy as the lazy Republicans want you to believe it is:

Wary employers clamped down on hiring and pushed the unemployment rate to a two-year high of 5 percent in December, an ominous sign that the economy may slide into recession. President Bush explored a rescue package, including a tax cut, with his economic advisers.

Gripped by uncertainty, government and private employers last month added the fewest new jobs to their payrolls in more than four years. In fact, employment at private companies alone actually declined. The Labor Department's report, released Friday, provided evidence of an economy greatly strained by a housing slump and a credit crunch.

The disappointing employment figures sent Wall Street into a nosedive, thrust the White House into damage control and ratcheted up the blame game as Republicans and Democrats battle for the presidency. The employment numbers also sparked expectations that the Federal Reserve will have to lower interest rates again. As expected, the Fed took action to make cash more available to banks.

With oil prices rising also a recession is seeming much more likely, and it is unlikely that the Republican White House will be able to stop it.

Bush said he is on top of the situation. "We can't take economic growth for granted," he said. "There are signs that will cause us to be ever more diligent and make sure that good policies come out of Washington."

The president said he wants to work with Congress "to deal with the economic realities of the moment and to assure the American people that we will do everything we can to make sure we remain a prosperous country."

With the odds of a recession increasing, Bush is weighing the need for an economic stimulation package. The president, who has been plagued by low public approval ratings for his handling of the economy, isn't expected to make any decisions until later this month. Tax cuts are under consideration, White House spokesman Tony Fratto said. "We've done tax cuts before and it's led to growth," Fratto said.

The State of the Union address is Jan. 28 and Bush is likely to unveil his package then.

The civilian unemployment rate jumped from 4.7 percent in November to 5 percent in December, the highest since November 2005, after the Gulf Coast hurricanes dealt the country a mighty blow. Total payrolls -- both private employers and government -- grew by just 18,000 last month, the worst showing since August 2003, when the economy suffered job losses as it struggled to recover from the 2001 recession.

"This is a major warning shot that the economy is in trouble," said economist Joel Naroff, president of Naroff Economic Advisors.

On Wall Street, stocks plunged. The Dow Jones industrials lost 256.54 points to close at 12,800.18.

With oil prices rising for many months at the same time the housing slump accelerated the possible recession was easy to spot -- unless you're a Republican and concerned about the next election, in which case you'll close your eyes and pretend the problem will just go away.

It didn't just go away.

The December employment picture was much weaker than economists were expecting.[...]

Manufacturers, construction companies, financial services all cut jobs in December -- casualties of the housing slump. Retailers also sliced jobs.

The government added 31,000 jobs in December, while private employers actually cut payrolls by 13,000, underscoring the weakness.

"Businesses have turned super conservative. With slower economic growth, has come the pink slips," said economist Ken Mayland, president of ClearView Economics.

The unemployment rate for blacks jumped to 9 percent in December, a 15-month high. The jobless rate for Hispanic climbed to 6.3 percent, the highest in more than two years. For all of 2007, the economy added 1.33 million jobs and the unemployment rate averaged 4.6 percent, the same as in 2006. Employment growth averaged 111,000 a month in 2007, down from 189,000 a month in 2006.

Countered Sen. Charles Schumer, D-N.Y.: "If there were ever a shot across the bow to this administration to get off its laissez-faire boat and start helping the economy, this is it."


Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!

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Comments (2)

Clancy:

Care to comment on this?
http://wizbangblog.com/content/2008/01/04/2007-review-job-markets.php

Yeah - thought so.

Lee Ward:

Looks like a Republican asshat spinning today's employment news.

The prediciton of a possible recession is forward-looking - Jayson's spin is all looking back, and just playing with statistics.

And yet there's no disputing that unemployment is at a two-year high TODAY, or that TODAY's unemployment report portends a possible recession, and yet the Wiznut post doesn't mention TODAY's news at all. The trend TODAY is that the economy is worsening...

Tsk tsk, not a word of TODAYs news in the Wiznut post. Gee, Im surprised.

Read the quotes in my post, Clancy. President Bush acknowledges the seriousness of the current economic situation. And look at the stock market plunging on TODAY's news... and does Wizbang have the integrity to share this news with you?

Yeah... thought so.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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