Recession fears rise as jobs lost
Employment reduced in usually stable industries
By David Leonhardt
THE NEW YORK TIMES
Saturday, April 5, 2003
The job market continued to deteriorate in March as the economy lost 108,000 jobs, raising worries that the United States is closer to slipping into a recession than it has been for more than a year.
The unemployment rate remained at 5.8 percent last month, the government reported Friday, largely because of a rise in the number of people not looking for work, who are considered to be outside the labor force.
"Job creation is the engine of the economy," said Richard Yamarone, an economist at Argus Research in New York, "and that engine is running out of steam."
Two years have passed since payrolls peaked, and employment has fallen by almost 2.4 million jobs during that span, according to the Labor Department's recently revised numbers. The loss -- 1.8 percent of employment -- is much worse than it was during the so-called jobless recovery of the early 1990s, when employment never fell by more than 1.3 percent during a two-year period.
The nation employs fewer people than it has at any point since late 1999, its longest stretch without job growth in 20 years.
Last month's job losses cut across almost every sector.
Manufacturers reduced employment for the 36th consecutive month. The service industry is usually a source of stability, but department stores, restaurants, airlines and hotels all pared their payrolls in March. After adding jobs through last year, local and state governments have also begun to make cuts to close budget deficits.
But the economy still does not seem to have fallen into a new recession. The last recession began in March 2001, and growth resumed in late 2001, although it has not been strong enough to cause job growth.
The average workweek increased to 34.3 hours last month from 34.1 hours in February, a sign that demand for new products has not dried up. The new hours helped weekly earnings to rise, strengthening household finances at a time when consumer spending has been weakening.
The loss of 465,000 jobs in February and March was aggravated by the calling up of 210,000 military reservists. Without the war, employers would probably not have cut employment as deeply, but they have also decided not to fill the positions with other workers.
Temporary-help agencies, whose employment level is considered a signal of the economy's short-term direction, cut 48,000 jobs -- almost 2 percent of their work force -- in March.
The conflict with Iraq seems to have damaged economic growth, but the war's effect is difficult to measure.
"The economy has appeared to hit a soft spot," said Chris Varvares, president of Macroeconomic Advisers, a research firm in St. Louis. "The $64,000 question is how much of that is due to the war and how much is due to underlying weakness."
The financial markets weren't rattled by the jobs report. The Dow industrials rose nearly 37, closing at 8277.15. |
