Latest job losses greater than expected
Job seeker Christopher Tan (R) gives a resume to a potential employer during the "Put Your Talent to Work" job and resource expo in Concord, Calif.
TEXT OF INTERVIEW
Renita Jablonski: A lot of little phrases come to mind, but none seem quite right when it comes to today's unemployment report. We knew it was going to be a big number, but it's more than any economist was predicting. Employers cut 598,000 jobs in January. That's the most since the end of 1974. The unemployment rate is 7.6 percent.
Bernard Baumohl with The Economic Outlook Group is with us. Bernard, what do these numbers say to you about the severity of the recession at this point?
Bernard Baumohl: It tells us that the economy is no where near yet bottoming out, that we are truly facing, I think coming face to face with a depression monster.
Jablonski: January tends to be a tricky month for these numbers, though, for these numbers -- can you explain that?
Baumohl: Yes it is, and the reason is because a lot of businesses have taken a look at the economic outlook and see nothing but the bleak news ahead. And what they've done is they've made a decision late last year that they were going to significantly trim their payroll. But they waited of course until after the holiday season. And so that's why January, we really did see this significant spike in layoffs. It may very well continue for the next two or three months, but I do expect it will level off and probably decline as we go into the spring and summer quarters.
Jablonski: Why is Wall Street not diving on this news this morning?
Baumohl: Well, I think the psychology of the market is focused a great deal on the stimulus package. You know, if Wall Street saw that Congress was simply arguing among themselves and delaying the completion of an economic stimulus program, then I can see the markets react very badly. But now that we're seeing just a consistent stream of economic reports showing just how dire the situation is, it puts a lot more pressure on Congress to get things done, and I think the markets do expect to see an economic stimulus package in the works very soon.
Jablonski: Bernard Baumohl is managing director of The Economic Outlook Group. Thanks so much.
Baumohl: Ah, you're very welcome.