Unemployment skyrockets and Factory orders plunge.

[stephendare]

http://news.yahoo.com/s/ap/20081002/ap_on_bi_go_ec_fi/factory_orders;_ylt=AgV4B958xyq2tC4s99uKOyiyBhIF

WASHINGTON - Orders to U.S. factories plunged by the largest amount in nearly two years in August as the credit strains began to hit manufacturing with full force.

The Commerce Department reported that orders for manufactured goods dropped by 4 percent in August, compared to July. That's a much worse performance than the 2.5 percent decline that economists had expected. It was the biggest setback since a 4.8 percent plunge in October 2006.

The weakness was led by big declines in orders for aircraft, down 38.1 percent, and autos, which fell by 10.6 percent, the worst performance in nearly six years.

Orders for non-defense capital goods excluding aircraft, considered a good indication of business investment plans, fell by 2.4 percent, the biggest setback in this category 19 months. It's an indication that businesses are slashing their investment plans in the weak economy, and growing credit strains are making it hard for companies to get loans to expand and modernize.

The Senate on Wednesday approved an administration-backed bill to provide $700 billion to the Treasury Department to buy bad mortgage debt from the financial system as a way to get banks to resume more normal lending operations.

Analysts are concerned that the economy is so stretched, however, that the country is headed for a recession even with the largest government market intervention since the Great Depression.

An earlier report Thursday showed the number of newly laid off workers filing new claims for unemployment benefits rose to 497,000 last week, an increase of 1,000 from the previous week. It was the highest level for jobless claims since just after the Sept. 11 terrorist attacks seven years ago.

The government is scheduled to release figures Friday on unemployment in September. The expectation is they will show layoffs rose by 100,000, the largest increase this year, with the unemployment rate holding at 6.1 percent.

The report on manufactured goods showed that durable goods, items expected to last three years, dropped by 4.8 percent in August. Orders for nondurable goods, items such as petroleum products, food and clothing, fell by 3.3 percent.

The dismal report on orders for August followed a report Wednesday from the Institute for Supply Management showing that manufacturing activity fell to the lowest level since the aftermath of the 2001 terrorist attacks.

http://economix.blogs.nytimes.com/2008/10/03/jobs-report-underlines-economic-decline/?ref=business

Jobs Report Underlines Economic Decline
By David Leonhardt

Updated 10:34 a.m.

The government is out with more bad economic news this morning: The job market began to deteriorate even before the financial crisis reached a more serious stage two weeks ago.

Employers cut 159,000 jobs in September, more than twice as many as in August or July, the Labor Department reported. It was the biggest monthly decline since 2003, when the economy was still losing jobs in the wake of the 2001 recession.

Forecasters had been expecting a loss of about 100,000 jobs in September.

The new number was especially worrisome because the government conducted its survey during the week of Sept. 8, before the credit crisis took a new turn for the worse on Sept. 17.

“The U.S. consumer is in major trouble, with wage and salary income growth evaporating, credit extremely tight or unavailable, home prices continuing to decline, and food and energy costs consuming a large share of household budgets,” said Joshua Shapiro, an economist at MFR, a research firm in New York. “Whatever the government might or might not do to try to bail out the financial system, a consumer-led recession is upon us, and it promises to be a serious one.” (More analyst reaction is here.)

Any single jobs report should be taken with a grain of salt, because the numbers can sometimes reverse themselves in the following month. But today’s report raises the possibility that the job market â€" and the broader economy â€" is also entering a new stage.

Until last month, job losses in the current economic slowdown had been relatively mild. Employers added relatively few jobs over the past five years, compared with past economic expansions, and it seemed that job losses might remain mild as a result. But a monthly loss of 159,000 isn’t mild; it was typical of the kind of decline during the job market’s slump between 2001 and 2003.

The unemployment rate held steady, at 6.1 percent, last month, but that was in part a reflection of the fact that more unemployed people stopped looking for work. To be counted as unemployed in the statistics, a person must be out of work and actively looking for a new job.

According to the new data, 375,000 people dropped out of the labor force last month. That number comes from a smaller, more volatile survey than overall employment and probably shouldn’t be taken literally. But it is also the reason the unemployment rate did not rise last month â€" and goes to show that the job market clearly is getting worse.

There was also a big spike in the number of people working part-time because they couldn’t find full-time work. More than 1.5 million people fell into this category in September, up from 400,000 a year earlier.

The job losses continued to be heaviest in industries tied to the housing market, like construction and real estate. But retailers, manufacturers, restaurants and hotels also shed jobs.

Government agencies and health-care employers â€" like hospitals and doctors’ offices â€" added jobs, as has been typical in recent years.

There was hardly any good news in this report. And the jobs numbers are especially important for two chief reasons. They are the first broad measure of economic activity during the previous month; and â€" unlike some other indicators, like gross domestic product â€" the jobs statistics describe the tangible effect that the economy is having on households.

Over the last year, the average hourly pay of rank-and-file workers â€" roughly 80 percent of the work force â€" has risen only 3.4 percent, according to the new numbers. The average workweek has also become shorter, so the increase in weekly pay has been even smaller: only 2.8 percent.

[whitey]

http://news.yahoo.com/s/ap/20081002/ap_on_bi_go_ec_fi/factory_orders;_ylt=AgV4B958xyq2tC4s99uKOyiyBhIF

Analysts are concerned that the economy is so stretched, however, that the country is headed for a recession even with the largest government market intervention since the Great Depression.

Those analysts should be worried if we do not have a recession.  A normal functioning economy has both booms and busts, a stagnant economy has neither and is much harder to recover from.  This is a healthy correction made out to be the end of the world.  Don't get me wrong, it will hurt, but it is good for the long term growth of the country.

[alta]

Amen!!