November 13, 2008
Job Losses
Posted by Lisa Fairfax

It is certainly no news to anyone that people are losing their jobs.  According to the Bureau of Labor Statistics (BLS), over one million jobs have been lost so far this year, and over half of them were lost in the last three months, indicating that the problem is accelerating.  Indeed, the unemployment rate for the month of October was at its highest level in 25 years.  Moreover, it seems like every time you open a newspaper there is a story about a corporation slashing jobs, and while the auto industry has received a lot of press on this issue, BLS reveals that many industries are experience significant job loss.  Just today the Department of Labor issued a report revealing that last week, the number of first time unemployment insurance claims was 516,000, an increase of 32,000 from the previous week.  These unemployment statistics only demonstrate what we already know--our economy is in crisis. The statistics also underscore the manner in which various sectors impact one another, fueling and deepening that crisis. 

For corporations, these job losses not only reflect the economic downturn, but also raise concerns about consumer spending which impact the bottom line and hence paint a fairly gloomy picture about corporation’s future economic prospects.  Indeed, increased unemployment not only means that those who are unemployed may not have necessary funds to spend, but also means that those who are employed will be more cautious in their spending because of fear about their own job security and the economy more generally.   Reports about declines in consumer spending bear this out, while putting even greater pressure on corporations and their balance sheet. 

Then too, the steady rise in unemployment is now fueling the housing crisis.  So while it used to bad mortgages that were forcing most people into foreclosure, unemployment is now the driving factor behind new foreclosures.  As one reporter notes, “the housing crisis is driving unemployment, which in turn has exacerbated the housing crisis.”

This kind of cycle seems to confirm the notion that our failure to resolve sufficiently the financial crisis on Wall Street can and would have dire consequences for those on “main street.”  And while that is easy enough to see, it is not easy enough to fix.  Moreover, it seems that now that the crisis has mushroomed and multiplied, any potential fix has become that much more complicated.  And in the meantime, job losses continue.   

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