Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Economy Shed 598,000 Jobs In January


From the studios of NPR West, this is Day to Day. I'm Madeleine Brand. Coming up, suicide among soldiers reaches an all-time high. But first...

(Soundbite of dialing)

(Soundbite of telephone ring)

(Soundbite of on-hold message)

Unidentified Woman: Thank you for calling the employment development department. We're currently receiving more calls than we can answer.

(Soundbite of beep)

(Soundbite of on-hold message)

Unidentified Man: I'm sorry. We are experiencing high call volumes. If you need to file a claim...

(Soundbite of beep)

(Soundbite of on-hold message)

Unidentified Woman: Wednesdays and Thursdays are the best days to call. Goodbye.

(Soundbite of dial tone)

BRAND: Job losses are at a 35-year high. New numbers are out today. In January, companies cut nearly 600,000 jobs, the largest monthly job loss in the U.S. since 1974. NPR's economic correspondent John Ydstie is here now. And John, the job losses were concentrated in a particular area or just across the board?

JOHN YDSTIE: Well, we've heard a lot about job losses in manufacturing in the past couple of weeks, firms like Caterpillar and Boeing, and indeed, manufacturing did lead the way down with over 200,000 jobs lost. But the striking thing about this report and the reports in the past couple of months is that the cuts are broad and deep and in almost all sectors of the economy and across the whole country. The only sectors with job grows were health care and government.

BRAND: So, the unemployment rate is now at about 7.6 percent.

YDSTIE: The unemployment rate rose from 7.2 percent to 7.6 percent, and it's likely to go up significantly higher. What you have is employers just scrambling to cut jobs and preserve cash.

BRAND: So, they're basically just hunkering down and just saying, you know, I've just got to cut these jobs to save my business.

YDSTIE: Right. And it's a negative feedback loop operating here. Consumers are hunkering down to - 3.6 million jobs have been lost over the past 13 months. That's taken about $360 billion in consumer purchasing power out of the economy. That means less demand for goods and services going forward, so more job cuts. There is one argument you could make that the cuts aren't likely to get a lot worse, and that is that businesses are looking ahead trying to right-size their workforce for a deep recession and making job cuts in advance. And that's why we've seen one and a half million jobs cut in the past three months alone. And maybe employers are getting close to where they want to be so that cuts will tail off in the coming months, but I think that's the optimistic scenario.

BRAND: Well, meanwhile, in Congress, there's a stimulus package working its way through, and that is aimed, at least on the part of the White House, to stop the hemorrhage of jobs, right?

YDSTIE: Well, that's the idea. But it's not likely to have a great deal of direct impact until late this year, because it takes awhile for the spending in the package to get going, so that means several more months of significant employment losses are likely. However, if the stimulus gets passed in a timely fashion, that is, within the next couple of weeks, it could help restore some confidence that help is on the way, and that might temper the layoffs somewhat going forward. Confidence that things are going to turn around is a big part of changing the behavior of businesses and consumers and getting them out of this pessimistic self-preservation mode.

BRAND: John Ydstie, NPR's economic correspondent. Thanks, John.

YDSTIE: You're very welcome, Madeleine.

BRAND: And here in California, today is the first day of Friday furloughs for state workers. Governor Arnold Schwarzenegger has ordered more than 200,000 state employees to stay home the first and third Fridays of every month without pay. The move will cut those workers' salaries by nearly 10 percent. It's expected to save the state $1.3 billion over the next year and a half. Among the offices closed today, the Department of Motor Vehicles, the Office of Emergency Services and the Department of Consumer Affairs. Unemployment offices are still open. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.