Manufacturing, Construction Jobs Take Biggest Hit
The Labor Department is reporting that the unemployment rate jumped to 5 percent in December from 4.7 percent in November. The jobs gain of 18,000 last month was the smallest in four years.
Most of the jobs lost were centered in construction and manufacturing. While the construction losses were expected given the sharp housing downturn, some economists were especially concerned that manufacturing was doing so poorly.
Factories shed 31,000 manufacturing jobs in December, and a total of 212,000 in 2007. The job losses come despite a continuing surge in U.S. exports, buoyed by the falling value of the dollar, which makes U.S. goods cheaper overseas.
“There needs to be a look at both what we can do domestically in terms of taxes and help with the costs of health care and energy,” says Scott Paul of the Alliance for American Manufacturing, a coalition of the United Steelworkers and major steelmakers.
“We also have to look at this from a competition perspective, and our manufacturers are just getting hammered,” Paul says.
The worsening jobs picture has the White House accelerating talk about a possible economic stimulus package and puts increased pressure on the Federal Reserve to further cut interest rates to boost consumer and business activity.
Though some economists doubt whether new tax cuts or spending could be enacted quickly enough to do much good, Democrats in Congress also stepped up calls for robust action as the economy veered closer to a recession.
The “R” Word
The weak jobs picture comes as the economy grapples with a depression in the housing sector, high prices for oil, food and other commodities and a continuing credit crunch that has hampered business.
Bush recently met with Treasury Secretary Henry Paulson and other economic advisers to discuss business conditions, though the White House has made no firm announcements about a stimulus plan.
Speaking to reporters after the meeting, Bush said his priority is to ensure that Congress extends his 2001 tax cuts, many of which will soon expire - and are unpopular with Democrats who control Congress.
Democrats, meanwhile, are searching for solutions that could win quick approval in a closely divided Congress.
Though some economists doubt whether new tax cuts or spending could be enacted quickly enough to do much good, Democrats in Congress also stepped up calls for robust action as the economy veered closer to a recession.
“Today’s job numbers should be a wake-up call that a public policy response is needed to help the economy recover more quickly and to help average Americans deal with any downturn,” said House Financial Services Chairman Barney Frank, D-Mass.
Trade Policies
The job losses are likely to underscore populist economic sentiment both in Congress and on the presidential campaign trail. Democratic presidential candidates, former Arkansas governor Mike Huckabee, a Republican, and Sen. Barack Obama, D-Ill., have expressed doubts about U.S. trade policies.
Obama says he would like to rework the North American Free Trade Agreement and eliminate tax breaks for companies that move jobs overseas. The Economist magazine recently quoted Huckabee saying, “I don’t want to see our food come from China, our oil come from Saudi Arabia and our manufacturing come from Europe and Asia.”
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