Employers Cut More Jobs Than Expected In June
RENEE MONTAGNE, host:
The Labor Department has new data this morning on unemployment, and it's not good. The U.S. economy lost 467,000 jobs in June. That puts the unemployment rate at 9.5 percent. The job losses are much higher than most analysts had expected. NPR's Yuki Noguchi is following this story and joins us now. Good morning.
YUKI NOGUCHI: Good morning.
MONTAGNE: And what does this disappointing job report add up to?
NOGUCHI: Well, it's basically a measure of just how deep this recession is, and it's also possibly an indication that the economy isn't yet responding well to the double shocks it's been dealing with, namely banking and housing. And, you know, since the beginning of the recession, which is now over a year and a half ago, the number of Americans without work has more than doubled. And that would be 15 million people right now - nearly that many.
MONTAGNE: Remind us how this plays out in the larger economy, what the ripple effect is.
NOGUCHI: Yeah, well, there's, of course, the personal toll, which - you know, if you've lost your job, it's hard to find one. And one testament to that is that the long-term unemployment rate - those are people who've been looking for jobs for more than six months - is now nearly four-and-a-half million. But, you know, as far as the larger impact goes, the number of jobs lost has a huge bearing on the housing market. It's probably the biggest indicator of whether people will be able to pay their mortgages. And if, of course, people can't pay their mortgages, they might foreclose. That puts more pressure on the housing prices, which makes people feel poorer, and they spend less money. And then the job - you know, the businesses end up cutting more jobs. And that's the sort of cyclical beast that is this economy.
MONTAGNE: And people were hoping that the $790 billion stimulus package would start having an effect by now. These jobless numbers, do they mean that it is not?
NOGUCHI: Well, Renee, it could be too soon to say. The administration obviously said that that stimulus package was supposed to create or save three million jobs. But that money was just sprinkled all over place, like tax breaks to try to boost short-term spending, as well as long-term projects like rebuilding highways and roads. Economists did say that the effect should start kicking in around now across a bunch of industries, but, you know, it's hard to say whether we're actually seeing that now.
MONTAGNE: Although people were talking about signs of improvement in the economy. You were hearing language like green shoots from some officials and the president. What about that?
NOGUCHI: Well, what you're seeing is mixed signs. So, you know, existing home sales are up, for example, which hopeful because, obviously, that's been a huge drag on the economy. And, you know, the shrinkage in the manufacturing sector has also slowed, meaning maybe there's some demand around the corner for goods. But, for example, we saw a consumer confidence survey yesterday that shows people are still worried about their jobs. And if people are worried, they'll spend less. And that means that the recovery gets pushed up further.
MONTAGNE: Well, are they spending less on everything?
NOGUCHI: Well, in particular, big-ticket items like cars. Yesterday, there was a report that new vehicle sales last month were down by nearly a third compared to last year. And that's the sort of thing that has broader impact, because there's so many jobs tied to the auto industry. And in a nutshell, that's why we're not out of the woods yet. You know, one economist I talked to yesterday says, you know, he expects the unemployment rate to keep going upward to 10.5 percent before it improves.
MONTAGNE: Yuki, thanks very much for joining us.
NOGUCHI: Thank you, Renee.
MONTAGNE: NPR's Yuki Noguchi on news today that unemployment is now 9.5 percent. Transcript provided by NPR, Copyright NPR.
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