Tsunami hitting the American economy

As the Joint Economic Committee gathered for a full committee hearing on “The Employment Situation: May 2008” Senator Charles E. Schumer (D- N.Y.), the Chairman of the Joint Economic Committee, and Phillip L. Rones, the Deputy Commissioner of the Bureau of Labor Statistics, discussed the increasing unemployment rates effect on the American economy. They explained how the economy has experienced the biggest single-month surge in unemployment since 1986, with Schumer going as far as describing it as “a tsunami hitting our economy.”

Rones focused on the depth of the issue by saying that the unemployment rate has increased from 5.0 to 5.5 percent within the last month. For the year thus far, job losses have totaled 324,000 producing an overall estimated 8.5 million Americans who are currently unemployed.

Rones also explained that unemployment has hit most major demographic groups. Unemployment rates increased for adult men, adult women, teens, whites, and blacks, while employment also declined in the areas of construction, manufacturing, retail trade, and temporary help services.

Rones and Schumer also discussed the program cuts that have been experienced by the Bureau of Labor Statistics (BLS) this past year, along with those that are planned to be cut in 2009. The BLS is experiencing a deficit of $30 million for 2008 and is preparing for another $50 million worth of programs to be cut next year. Schumer agreed with Rones saying that these deficits need to be fixed in order to guarantee that the Committee is able to receive the accurate information they require, helping them make the best possible decisions regarding the American economy.

80,000 jobs lost in March

Keith Hall, the commissioner of the Bureau of Labor Statistics testified before the Joint Economic Committee on the March employment statistics. He reported that employers across all sectors of the labor market cut payroll by 80,000 in the month of March. This has cause the unemployment rate to rise from 4.8 percent to 5.1 percent in the first quarter. The total decline in the last quarter was 232,000 jobs. In his opening statement Hall said, "I would note that the labor market conditions started to weaken more than a year ago." He later added that 68,000 of lost jobs are in hosing-related industries.

There were only three members present. Sen. Charles Schumer (D-NY), Sen. Sam Brownback (R-KS), and Rep. Baron Hill (D-IN) who acted as chairman. Schumer only stayed to make an opening statement saying that these numbers should serve "as a wake up call" to the Bush administration. In the questions both Brownback and Hill asked Hall to forecast the next quarter and comment on the policy context of the recent data. Hall repeatedly refused to project data or give an opinion on policy, saying that the numbers should speak for themselves. He refused to define the economy or the labor market as in a recession.



Construction jobs were the hardest hit, loosing 51,000 jobs in March. Since peak employment in September 2006, total construction employment is down by 394,000 jobs. Another sector that has decreased was manufacturing. Manufacturing jobs decreased by 48,000 and automobile manufacturing took half of those losses. In his written statement Hall reported, "The number of unemployed persons who were job losers continued to trend up. Job losers represented 54 percent of all unemployed persons in March, up from 48 percent 12 months earlier." 5,000 jobs were lost in the financial activities sector, which is normally considered a growth category.

Hall reported that the only sectors to add jobs were education and health care. In these sectors combined 42,000 jobs were gained. He said that overall this indicated that consumer spending was weak, making companies less likely to hire temps. He said that the labor market figures are consistent in what he described as "the general weakening of the country."