Fallout: The Financial Crisis

Job losses expected to keep climbing

Nancy Marshall-Genzer Nov 7, 2008
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Fallout: The Financial Crisis

Job losses expected to keep climbing

Nancy Marshall-Genzer Nov 7, 2008
HTML EMBED:
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TEXT OF STORY

Kai Ryssdal: Now, more on the employment numbers out today. The Labor Department said 240,000 people lost their jobs in October. For those people, the consequences are obvious and immediate — they don’t have a paycheck anymore. But when an economy continues to lose large numbers of workers like this, that means everyone is affected.

Marketplace’s Nancy Marshall Genzer has more.


Nancy Marshall Genzer: The dismal unemployment numbers were a kick in the shins the economy really didn’t need. Retail sales are already down, but they’re expected to decline even more as newly unemployed consumers put a death grip on their wallets. Jon Fisher teaches business at the University of San Francisco.

Jon Fisher: There’s a classic trickle down effect where if you’re losing a job, it is going to put certain purchases – especially large purchases – at risk, like cars.

But Fisher doesn’t think foreclosures will increase because of higher unemployment. He thinks the housing crisis has bottomed out. He says there aren’t many homeowners left who are so close to the edge they’d have to stop paying their mortgages if they lost their jobs. But economist Joshua Shapiro of MFR consulting, shoots down that bit of optimism.

Joshua Shapiro: In every economic cycle in the past, foreclosures have risen considerably as people start getting thrown out of work in big numbers, and I don’t see why it’s going to be any different this time around.

And even if people aren’t getting thrown out of work, they’re still cutting back on spending. Hourly earnings aren’t keeping up with inflation. And economist Heidi Shierholz of the Economic Policy Institute says some consumers are under-employed.

Heidi Shierholz: Weekly earnings fell because people just can’t get as many hours as they want.

Shierholz says those people might be a step away from a pink slip. She expects the unemployment rate to rise to at least 8 percent by the end of next year.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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