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The Honolulu Advertiser
Posted on: Saturday, March 7, 2009

Obama touts stimulus as job losses surge

By Jeannine Aversa and Darlene Superville
Associated Press

Hawaii news photo - The Honolulu Advertiser

President Obama was in Columbus with outgoing police chief James Jack-son, center, and his successor, Walter Distelzweig.

Photos by TERRY GILLIAM | Associated Press

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Hawaii news photo - The Honolulu Advertiser

During Columbus police graduation exercises yesterday in Ohio, President Obama touted the 114th recruit class to his critics as proof that the stimulus package is paying off.

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WASHINGTON — Tolling grimly higher, the recession snatched more than 650,000 Americans' jobs for a record third straight month in February as unemployment climbed to a quarter-century peak of 8.1 percent and surged toward even more wrenching double digits.

The human carnage from the recession, well into its second year, now stands at 4.4 million lost jobs. Some 12.5 million people are searching for work — more than the population of the entire state of Pennsylvania.

While acknowledging the "astounding" number of job losses in February, President Obama told critics of his $787 billion economic recovery plan yesterday that it is saving jobs and said, "I know we did the right thing."

He suggested that critics talk to 25 police recruits in Columbus, Ohio, who owe their jobs to stimulus spending and "talk to the teachers who are still able to teach our children because we passed this plan."

During a graduation ceremony for the police recruits in Columbus, he also noted "the nurses who are still able to care for our sick and the firefighters and first responders who are still able to keep our communities safe."

Still, no one seems immune: The jobless rate for college graduates has hit its highest point on record, just like the rate for people lacking high school diplomas.

Employers also are holding hours down and freezing or cutting pay as the recession eats into sales and profits. If part-time workers who can't find full-time jobs are counted in, along with those who have simply given up looking, the rate would be 14.8 percent, the highest in records going back to 1994.

The wintertime blizzard of layoffs — nearly 2 million lost jobs in just three months — is destroying any hope for an economic turnaround this year while feeding insecurities among people who still have jobs as well as those who desperately want to find work.

Yesterday in Columbus, Obama touted the 114th police recruit class as proof that the stimulus plan, which drew scant Republican support in Congress, is paying dividends.

"I look at these young men and women, I look into their eyes and I see their badges today, and I know we did the right thing," Obama said, with the recruits seated behind him on stage.

He said the police recruits had faced a future of joblessness, the same "future that millions of Americans still face right now."

"Well, that is not a future I accept for the United States of America," Obama said, explaining why he signed the stimulus bill on Feb. 17.

The recruit class was laid off in January before they could even start walking the beat.

DOW DOWN FOR WEEK

Stocks seesawed up and down yesterday before finishing with a modest Dow Jones industrials gain of 32.5 points. Still the Dow was down a dispiriting 6.2 percent for the week.

The Labor Department's report, released yesterday, showed pink slips nationwide hitting all categories — blue-collar, white-collar, highly educated and not.

Employers slashed payrolls by a net total of 651,000 last month — the third month in a row that job losses topped 600,000. It was the first time that's happened in government record-keeping dating to 1939.

"These are gargantuan declines," said Stuart Hoffman, chief economist at PNC Financial Services Group.

"Horrible," said Ian Shepherdson, chief economist at High Frequency Economics.

The unemployment rate leaped to 8.1 percent from 7.6 percent in January, the highest in more than 25 years. Some economists now predict the rate could hit 10 percent by year-end and peak at 11 percent or higher by the middle of 2010.

"The massive hemorrhage of jobs is reminiscent of the 1982 recession when the jobless rate hit 10.8 percent. Unfortunately, it will get much worse," predicted Sung Won Sohn, economist at the Martin Smith School of Business at California State University. "It is hard to see where the bottom is."

Besides the 12.5 million total for unemployed people in February, the number of people forced to work part time for economic reasons rose by a sharp 787,000 to 8.6 million. Those are people who would like to work full time but whose hours were cut back or were unable to find full-time work.

If those people — along with discouraged workers — were factored in, the rate would have been 14.8 percent in February.

The jobless rate for people with bachelor's degrees or higher jumped to 4.1 percent. And the rate for people without a high-school diploma climbed to 12.6 percent. Both are the highest in records dating to 1992.

The jobless rate for blacks rose to 13.4 percent, the highest since June 1993; the rate for Hispanics hit 10.9 percent, the highest since April 1993.

JOB CUTS ALL AROUND

With no place to land, the number of "long-term unemployed" — those out of work for 27 weeks or more — climbed to 2.9 million, the most in records back to 1948.

Construction companies eliminated 104,000 jobs last month. Factories axed 168,000. Retailers cut nearly 40,000. Professional and business services got rid of 180,000, temporary-help agencies 78,000. Financial companies reduced payrolls by 44,000. Leisure and hospitality firms chopped 33,000.

The few areas spared: education and health services, as well as government, which boosted employment last month.

For those with jobs, employers kept a tight rein on hours. The average workweek in February stayed at 33.3 hours, matching the record low set in December.

Disappearing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench, driving companies to lay off workers. It's a vicious cycle in which all the economy's problems feed on each other, worsening the downward spiral.

A bit of positive economic news came from the Federal Reserve, which reported that consumer borrowing increased at an annual rate of $1.76 billion in the first month of the year. Still, the small rise is unlikely to shake economists' views that borrowing will remain weak this year as fearful consumers tighten their belts.

The economy contracted at 6.2 percent in the final three months of 2008, the worst showing in a quarter-century. Analysts believe the economy in the current January-March quarter is contracting at a pace between 5.5 and 6 percent or more.