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40,000 Jobs Disappear
-- December 6, 2002
The economy lost a net 40,000 jobs in November, and the unemployment rate skyrocketed to 6% from 5.7%. Despite Wall Street's optimism that business spending has increased, clearly, businesses are still holding back from creating new jobs and hiring new employees. That means the unemployment rate will continue to increase, and consumers will cut spending even more than they already have. In fact, plunging consumer spending was a major reason why so many jobs were lost -- retailers eliminated 39,000 jobs from their payrolls in November.
According to employment experts, a robust recovery in the economy requires 100,000-plus jobs created each month for a period of several months. In contrast, in addition to the 40,000 jobs lost in November, the economy gained just 6,000 jobs in October, and lost 4,000 jobs in September.
Nevertheless, the major stock market averages ended the day up, owing to the resignation announcements of Treasury Secretary O'Neill and White House Economic Advisor Lawrence Lindsay. Investors seem to believe that there will be a much-needed change in economic policy in Washington. But the fact is the resignations of O'Neill and Lindsay just go to confirm what we've been saying all along: The economy is much worse than Wall Street and Washington will admit. And no amount of Cabinet reshuffling is going to bring the economy out of its doldrums.
The only way for the economy to begin to recover is for the bubble in stocks to FULLY deflate, for consumers to get out of debt and begin saving, for business to begin building for the future, and for Wall Street to clean up its act. It may require fundamentally changing our ways, but our nation will be stronger in the end.
Weak Jobs News Raises Concern on Economy