Saturday, February 2, 2008
Gloomy January Unemployment Numbers
--The Labor Department reported that nonfarm employment in January fell by 17,000 jobs, the first drop in more than four years. --The overall jobs decline in January suggested an unsettling scenario: The labor market, which had been resilient in the face of the subprime-mortgage crisis and the credit crunch, may now be succumbing. "When push comes to shove, the final linchpin is the employment number," said John Silvia, chief economist at Wachovia Corp. "When that number falls, you're in trouble." --The data vindicated the Federal Reserve's 1.25 percentage points of cuts in short-term interest rates to 3% in the last two weeks and suggest the central bank will lower rates again at its March 18 meeting, if not sooner. --The January data leave little doubt that the deepening housing recession is taking an increasingly heavy toll on the overall economy --A separate Reuters/University of Michigan report Friday found that consumer sentiment nudged up to 78.4 in January from 75.5 in December, but it was well below the 96.9 level a year ago. --In addition, government employment fell by 18,000 jobs in January, perhaps due to budget shortfalls in areas most affected by the housing crisis. Palm Beach County, Fla., has instituted a partial hiring freeze, with only public-safety jobs like firefighters exempt.