And who were the folks that said government jobs and job security in the the same sentence?

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Submitted by Coronita on September 7, 2007 - 7:20am

"Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring"

 

 

AP
Employers Cut Jobs in August
Friday September 7, 9:09 am ET
By Jeannine Aversa, AP Economics Writer  Employers Cut Payrolls by 4,000 in August, the First Drop in US Jobs in 4 Years

WASHINGTON (AP) -- Employers sliced payrolls by 4,000 in August, the first drop in four years, a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy.

The latest snapshot of the employment climate, released by the Labor Department on Friday, also showed that the unemployment rate held steady at 4.6 percent, mainly because hundreds of thousands of people left the work force for any number of reasons.

Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.

"I think a lot of businesses are moving to the sidelines to wait and see how things shake out," said Ken Mayland, president of ClearView Economics.

The report was much weaker than economists were expecting. They were forecasting payrolls to grow by 110,000.

The drop of 4,000 jobs in August was the first decline since August 2003.

The surprisingly weak report provides the Federal Reserve with a reason to lower interest rates when it meets next on Sept. 18.

Federal Reserve Chairman Ben Bernanke, in a speech last week, said the Fed stands ready to do all that is needed to keep the credit crunch that has rocked Wall Street from damaging the economy.

Economists increasingly believe the Fed will lower a key interest rate, now at 5.25 percent, by at least one-quarter percentage point on Sept. 18, its next meeting. The Fed has not lowered this rate in four years.

"Clearly the economy is struggling, and this is the kind of evidence that really makes a strong case for a Fed easing move," Mayland said.

Those with jobs, however, did see modest wage gains.

Average hourly earnings rose to $17.50 in August, a 0.3 percent increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9 percent. Wage growth supports consumer spending, a major ingredient for a healthy economy. If the job markets continues to lose steam, however, wage growth will eventually slow, too, economists said.

The modest wage growth could ease inflation fears, giving the Fed more leeway to cut interest rates.

On the payrolls front, job gains in June and July turned out to be smaller. The economy added 68,000 new jobs in July compared with 92,000 reported a month ago. For June, 69,000 new jobs were created, less than the 126,000 previously reported.

The 4,000 jobs cut in August are from both private and government employers. The government actually cut 28,000 jobs, while all private employers added 24,000.

Credit problems began with "subprime" mortgages held by people with spotty credit histories or low incomes. The problems have spread to some more creditworthy borrowers and intensified in August, unnerving Wall Street. In reaction, the Fed has pumped tens of billions of dollars into the financial system and lowered an interest rate that it charges banks for loans.

Credit is the economy's life blood. If it becomes more difficult to obtain, people might tighten their belts and companies might spend and invest less, including cutting back on hiring. That would crimp overall economic activity.

The economy, which grew at a brisk 4 percent pace in the April-to-June period, is expected to slow to half that pace in the three months from July through September. Against this backdrop, the unemployment rate is expected to creep higher, reaching close to 5 percent by the end of the year.

The unemployment rate, which is derived from a different statistical survey than the payroll figures, held steady as 340,000 people left the work force. Fewer people in that survey reported finding employment in August compared with July.

President Bush's handling of the economy has gotten lukewarm ratings from the public. Only 41 percent approved of the president's economic stewardship in early August, according to an AP-Ipsos poll.

Mindful of political backlash heading into the 2008 elections, the administration and Democrats on Capitol Hill have been scrambling to help millions of homeowners in danger of losing their homes and looking for other ways to limit the fallout.

 

Submitted by Coronita on September 7, 2007 - 7:22am.

Well at least short term fix, I think interest rates are going to be cut.

Long term, we probably are going to head into a recession at this point.

Sept 18 might be the date to exit long positions after all the fed's decision 

Submitted by JES on September 7, 2007 - 7:47am.

To be perfectly honest, IMO if you are looking for an extremely stable long term job you should look to the US Military and the Federal Government. With the upcoming surge in fereal retirements (we're talking something like 60% of the entire work force in the next 5-10 years), opportunities will, and do, abound. Not for everyone, but like I said, if you are concerned about getting a stable job look into it. The military is a no brainer, with the caveat that you may get deployed overseas and have to fight in a war. Otherwise, if you were to join as a 2ndLt in the Marines, for example, there is a very good chance that you can put in 20 years, at age 43 (if you start at 23) start getting paid 1/2 your final salary for life plus free health care etc., and continually get promoted through at least the rank of Major. Selection rate to 1stLt is near 100%, to Captain is probably 90-100%, and to major has to be around 80-85%. Corps is growing now = higher selection rates, more opportunities. Just two examples of stable careers. Not always physically safe, and not always stable for a family, but you'll likely never get laid off, have great benefits etc. Relative to other career options, these two are very, very secure.

Submitted by one_muggle on September 7, 2007 - 2:05pm.

Job losses, when they come, in the USG are almost entirely from hiring freezes and attrition, they do not layoff and it is very hard to get fired. Even if an entire department is closed, all employees are offered jobs elsewhere--which they can choose not to take, but it is a choice.
I am pretty sure it takes an act of congress to have the equivalent of a civil service layoff.
For better or worse, govie jobs are still very safe.

-one muggle

Submitted by an on September 7, 2007 - 2:19pm.

one_muggle, very well said. This article probably mean government contractors, not directly government jobs. I know people who are engineers for the Navy. I talk to them and they said lay-off is the last thing on their mind. If they close the base, they have first priority in other job opening in other part of the country and the government will pay for relocation. They can choose not to move, but that's their choice, not because they got laid off. They even have people who will look for jobs for them at other bases in the US. Unless there's major shift in government like one_muggle stated, they're pretty safe.

Submitted by kewp on September 7, 2007 - 2:22pm.

I work for the UC system, so am I government or education?

Ha!

Submitted by jennyo on September 7, 2007 - 2:31pm.

State government jobs are also very secure. Government jobs being cut does not necessarily equate to government employees losing their jobs. The state has a terrible time getting employees to fill the thousands of vacancies that exist every day. Even during the 2001 budget crisis when everyone got "surplused," only one or two people in the entire state got laid off and that is because they refused to bump back into a demotion.

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