http://money.cnn.com/2008/09/05/news/economy/jobs_august/index.htm?postversion=2008090511

Jobless rate soars to 6.1%

Unemployment surges to 5-year high as employers cut workers for eighth straight month. Total job losses for 2008: 605,000.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: September 5, 2008: 11:03 AM EDT

NEW YORK (CNNMoney.com) -- The unemployment rate soared to a nearly five-year high in August as employers trimmed jobs for the eighth straight month, the government reported Friday.

The unemployment rate rose to 6.1%, the highest level since September 2003. That's up from 5.7% in July and 4.7% a year ago.

In addition, the economy suffered a net loss of 84,000 jobs in August, according to the U.S. Department of Labor, compared to a revised reading of a 60,000 job loss in July.

The U.S. economy has lost 605,000 jobs so far this year.

The jobs report immediately drew comment from the presidential candidates as well as the Bush administration.

The White House pointed to other economic readings, including last week's gross domestic product report. It showed second quarter growth jumping to a 3.3% annual rate, helped by economic stimulus checks and strong exports.

"While these (jobs) numbers are disappointing, what is most important is the overall direction the economy is headed," said the White House statement.

But the campaign of Democratic presidential candidate Barack Obama said the report points out the failure of Republican policies.

"John McCain showed last night that he is intent on continuing the economic policies that just this year have caused the American economy to lose 605,000 jobs," Obama said in a statement. "John McCain's answer is more of the same: $200 billion in tax cuts to big corporations and oil companies, and not one dime of tax relief to more than 100 million middle-class families."

The McCain campaign argued that Obama's economic policies would cause more job losses in the future.

"Sadly there are those who believe that to grow this economy we must raise taxes, impose costly new mandates and isolate America from the global economy," McCain said in a statement. "When our economy is hurting, the last thing we should do is raise taxes as Barack Obama plans to do and has done."

Job losses widespread
Both numbers in the August report surprised experts. Economists surveyed by Briefing.com had forecast the unemployment rate would remain unchanged from the July reading and that payrolls would fall by 75,000 jobs.

Manufacturing lost 61,000 jobs, while construction employment fell by 8,000. But the job losses were widespread and went beyond those two troubled sectors.

Retailers trimmed 20,000 jobs despite the back-to-school shopping season, which for many stores is typically second in sales only to the holiday period. Business and professional services - a broad category that includes industries such as accountants, consultants and legal services - lost 53,000 workers. Leisure and hospitality cut 4,000 jobs.

The few sectors showing gains were government as well as education and health services, which gained 72,000 between them to temper the losses elsewhere.

"Job losses are still mild by recession standards, but the losses are relentless and they are accumulating," said Bob Brusca of FAO Economics. "If job growth had paced with population growth during this year, it would have meant 1.3 million new jobs would have been created. Instead 605,000 were lost. That means about 2 million fewer people are working than if the economy were on a steady path. And that's a big number."

But while economists generally study the payroll numbers most closely, it's the unemployment rate that registers with most Americans when they think about the labor market.

Unemployment worries could feed job losses
The jump is likely to be a new blow to consumer confidence, which had just started to show gains from earlier lows due to declining gasoline prices. Confidence could also be hurt by another report Friday from the Mortgage Bankers Association showing a record 1.2 million home foreclosures during the second quarter.

And falling consumer confidence could put a brake on spending and in turn drag down the economy.

"If consumer spending doesn't hang in there in the fourth quarter, we're of course going to have a higher unemployment rate and maybe more than the 50,000 to 75,000 monthly job losses we've been seeing," said Tig Gilliam, chief executive of Adecco Group North America, a unit of the world's largest employment firm.

Mark Vitner, chief economist at Wachovia, said that the unemployment rate might have been lifted higher an extension of long-term unemployment benefits that took effect in July. Some discouraged job seekers who had been out of work more than 26 weeks may have looked for work again in the month in order to collect the benefits once again. But Vitner said even without that impact, unemployment probably would have jumped to about 5.9%.

And recent filings for initial jobless benefits by the newly unemployed is now running at more than 400,000 a week, a level typically associated with a recession.

"You don't have to be an economist to know the economy is weak right now," Vitner said. "Obviously there's some real pain out there."

Gilliam and many economists had been expecting the unemployment rate would hit 6% late this year or early next year.

"I'm not forecasting 7% unemployment, but we're weighing what 6% unemployment now means going forward," Gilliam said.

Woes beyond unemployment rate
The unemployment rate doesn't tell the whole picture about how difficult the job market has become. It only counts those who looked for work during the month; it excludes the unemployed who want jobs but have stopped looking for work. And it also doesn't count those who want full-time jobs but can only find part-time positions.

The so-called underemployment rate, which includes those two other groups, rose to 10.7% - the highest reading since 1994.

The pain was widespread in different sectors of the work force. Those with college degrees were better off than the population as a whole. But the number of educated workers without jobs jumped 15% in the month to 1.2 million, the third highest total since the Department of Labor started tracking that number in 1992.

Despite the widespread weakness in the report, wages actually edged up faster than expected. The average hourly wage was up 7 cents in the month to $18.14. The previous month's rise was also revised slightly higher.

Still, the average hourly wages have only increased 3.6% in the last 12 months, well below the 5.6% rise in prices shown in the July Consumer Price Index. That means the typical worker's wages are not keeping up with prices.

The Federal Reserve's most recent economic forecasts had projected annual unemployment in the range of 5.5% to 5.7% this year, and between 5.3% and 5.8% next year. Even its worst case scenario put the upper end of the unemployment range at 5.8% this year and 6.1% next year.

The consensus is that the Fed will leave its key overnight lending rate, it's primary tool for spurring economic growth, unchanged through the end of the year. Some policymakers at the central bank have been pushing for higher rates to fight inflation. Many observers expect that the Fed's next change will be higher.

First Published: September 5, 2008: 8:40 AM EDT

http://money.cnn.com/POLLSERVER/results/41710.html

QUICK VOTE RESULTS

How do you feel about your job?

I love it 31%
I want to quit 17%
Lucky to be employed 40%
I don’t have a job 12%

http://money.cnn.com/2008/09/05/real_estate/foreclosures_rise_again/index.htm?postversion=2008090510

Record 1.2 million homes hit by foreclosure

Loans in foreclosure have doubled over the past year, while delinquency rates continue to soar.

By Les Christie, CNNMoney.com staff writer
Last Updated: September 5, 2008: 2:44 PM EDT

NEW YORK (CNNMoney.com) -- A record 1.2 million homes were in foreclosure during the second quarter of 2008.

That represents 2.8% of all outstanding loans, up from 1.4% of all loans during the same period a year ago, according to a report released Friday by the Mortgage Bankers Association (MBA).

And 490,000 of the 45 million home mortgages serviced by MBA members began new foreclosure proceedings. That's up 9% from the 448,000 starts recorded in the previous quarter, and marked the seventh straight quarter that foreclosure starts increased.

The delinquency rate, which measures mortgages that aren't in foreclosure but have missed least one payment, also hit a record high.

During the three months ended June 30, 2.9 million homeowners, or 6.4%, were behind on their payments, up more than 25% from last year.

The MBA has been tracking foreclosure and delinquency data since 1979.

"The national foreclosure numbers continue to be driven by the hardest hit states that are continuing to get much worse," said Jay Brinkmann, MBA's Chief Economist. "The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland."

California and Florida accounted for 39% of all foreclosures started during the quarter. Those two states as well as six others - Nevada, Arizona, Michigan, Rhode Island, Indiana, and Ohio - all had foreclosure start rates higher than the national average.

Subprime still sinking
Once again, subprime adjustable rate mortgages (ARMs) weighed heavily on the down side. Subprime ARMs, which represent only 6% of all loans outstanding, accounted for 36% of all foreclosures started during the quarter. In other words, 6.6% of all subprime ARMs went into foreclosure during the period - nearly 20 times the rate for fixed rate prime mortgages.

While the percentage of all subprime ARMs past due fell slightly to 21% from 22.1%, the proportion of these loans that are 90 or more past due rose to 26.8% from 24%, indicating that many of these borrowers are falling deeper into trouble.

"The big problem," said Mike Larson, a real estate analyst with Weiss Research, "is this mortgage crisis long since stopped being just about subprime." Indeed, the prime delinquency rate rose to 3.9% from 3.7% in the first quarter of 2008, and 2.7% a year earlier. "This is the highest reading yet."

"Even if subprime stabilizes," said Larson, "I would anticipate that prime loans would start to play catch-up. We're not just confronting a credit crisis any more, we're dealing with broad economic problems that are contributing to delinquency rates."

On the bright side, Larson says the deterioration in home prices has slowed in the last couple of months, which could help delinquencies level off as well.

"They'll continue to worsen," he said, "but not at the pace of the last year."

What's next
Nevertheless, Jay Brinkmann warned that it would be fruitless to try and call a bottom in this market any time soon.

"Real estate markets are local and some markets are already improving," he said in a statement. "For example, even Michigan, one of the worst hit markets in the country, has now gone three quarters with little to no increase in its rate of foreclosures. Likewise, Massachusetts showed a very large drop in foreclosure starts, perhaps signaling a bottom."

"Because of the sheer size of California and Florida, an improvement in the national numbers, whether delinquencies, home prices or any other measure, is unlikely until we see some turnaround in those two states."

Much of what's ahead depends on home prices, according to Brinkmann. "Home price declines have a bigger impact on foreclosure rates than foreclosures have on home prices."

Home price declines drive foreclosure rates higher by stripping value from homes and putting mortgage borrowers underwater, owing more than their homes are worth.

"So many of the loans are going from delinquency to foreclosure because they are so deeply underwater," said Patrick Newport, a real estate analyst with Global Insight.

Foreclosure prevention efforts could help stem this tide, said Faith Schwartz, Director of Hope Now, the coalition of lenders, servicers, mortgage investors and community groups. "The more people who get their mortgage loans stabilized, the more home prices will stabilize," she said.

But whether delinquencies worsen over the next few months is largely dependent on how the economy shakes out, according to Brinkmann, and right now, things don't look good. The unemployment rate jumped to 6.1%, the government reported on Friday, a five-year high.

First Published: September 5, 2008: 9:59 AM EDT

http://money.cnn.com/video/#/video/news/2008/09/04/news.090408.lookahead.cnnmoney

Jobs report looking grim 1:07

Analysts are expecting a loss of 75,000 jobs in August - a sizable increase from the 51,000 jobs lost in July.

• Jobless claims jump unexpectedly

http://money.cnn.com/2008/09/04/news/economy/jobless_claims.ap/index.htm

Source: CNNMoney
Added On September 4, 2008

http://money.cnn.com/video/#/video/news/2008/09/04/news.090408.lookahead.cnnmoney

From the Dispatch on August 16th...State's unemployment rate jumps to 16-year high: 7.2%

Ohio's unemployment rate rose to 7.2 percent last month, the highest level since 1992, according to state figures released yesterday. The rate is up 0.6 percentage point since June and 1.6 percentage points in the past 12 months.

About 11,600 jobs were lost in July, dropping the state job total to about 5.4 million.

The pain was felt in just about every job sector. The greatest losses were in leisure and hospitality services, which shed 3,000 jobs, a sign that hotels and restaurants are having trouble. Retail trade also was way down, with a loss of 1,300 jobs.

And this came out today...

COLUMBUS, Ohio -- It's no secret that the City of Columbus is dealing with some serious budget problems.

NBC 4 has been following the story from the beginning, trying to get the answers you need.

FAST FACTS:

The City of Columbus has laid off 42 people and plans to leave some vacant positions open.
The city said they are $8 million off in revenue and have overspent by $6.3 million.
Now, the budge is hitting a crisis point and cuts in police and fire may be needed.
Earlier this week, Columbus Mayor Michael Coleman said it is time for safety services to step up to the plate.

He wasn't talking about laying off police officers or firefighters yet, but the chief of police said the needed cuts would include the summer strike force initiative, equipment for riot control and new horseshoes for the mounted patrol.

The recommended cuts include $6,000 for maintaining horseshoes, $6,000 for veterinary care, $9,000 for the horse bedding, $280,000 for helicopter fuel and another $37,000 for helicopter maintenance.

Police Chief James G. Jackson called the cuts "unconscionable," according to a letter to the finance director.

On the city health department side, the proposal includes making reductions for drug and alcohol prevention and eliminating rodent control.

In the recreation and parks department, it includes the elimination of many of the city pools next summer and the elimination of free swimming lessons.

Nearly half of the free concerts in the city will also be eliminated.

High fuel costs and a flat tax base due to foreclosures are being blamed for the proposed cuts.

The budget for 2010 is expected to be even worse.

Those campaigning in the Buckeye State better be talking about creative ways to increase jobs around here. Hard times are upon us and worse times seem to ahead it seems.

The truth will set you free. But first, it will piss you off. ~Gloria Steinem

http://www.newsmax.com/

People walk past a sign at the Freddie Mac headquarters in McLean, Va. Fannie Mae and Freddie Mac, two groups that underpin trillions of dollars in mortgages, are facing a crisis that could force intervention by the federal government.

U.S. to Seize Mortgage Giants

http://www.newsmax.com/headlines/freddie_fannie_takeover/2008/09/05/128240.html

This is in the CNN transcript below as part of the report on the economy:

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: "Most economists will tell you that, just to keep up with the growth in the working-age population in the United States, we have to add 100,000 to 150,000 jobs a month. We lost 84,000 jobs in August. We have been losing an increasing number of jobs for the last eight months. That's the serious part."

http://transcripts.cnn.com/TRANSCRIPTS/0809/05/sitroom.01.html

THE SITUATION ROOM

Obama Fights McCain; Palin Reform Pitch; Jobless Rate Soars; McCain & Palin Road Test

Aired September 5, 2008 - 16:00 ET

WOLF BLITZER, CNN ANCHOR: "Let's get back to our top story right now, very, very bad economic numbers. Jobs losses coming out, another 80,000 jobs lost in the last month. More than 600,000 jobs so far lost since January 1st.

Let's go to the White House, where they're watching this story. Elaine Quijano is standing by.

Not very encouraging numbers, Elaine. What are they saying at the White House?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, officials here at the White House insist that the economy is resilient. But, of course, officials are also acknowledging that today's numbers are disappointing.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): The U.S. economy is bleeding jobs, amid continued fallout from the housing and credit crises. Last month, employers slashed 84,000 jobs, far more than the 75,000 experts had predicted.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Most economists will tell you that, just to keep up with the growth in the working-age population in the United States, we have to add 100,000 to 150,000 jobs a month. We lost 84,000 jobs in August. We have been losing an increasing number of jobs for the last eight months. That's the serious part.

QUIJANO: So far this year, the economy has shed a whopping 605,000 jobs.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: There's no question that the labor market is not as strong as we would like. And these were disappointing numbers.

QUIJANO: Yet, with the election just two months away, the White House insists, better economic times are ahead. Press Secretary Dana Perino dismissed the notion that the economy may be in the early stages of a recession.

PERINO: We have gone through the recession thing before. I think -- I just told you that the last two quarters showed growth. I just haven't heard anybody talking necessarily about a recession.

QUIJANO: The Bush administration argues, the economic stimulus package passed this year is having a positive impact. And officials are hoping the job numbers will reflect that later in the year. Still, the signs so far paint a bleak picture.

VELSHI: Fundamentally, this jobless number is not going down because people don't sort of have faith in the economy, so they're not employing more people. We're likely to see this continue for the next few months.

(END VIDEOTAPE)

QUIJANO: Now, the latest numbers also include an unemployment rate of 6.1 percent, the highest level in five years. Still, officials here at the White House insist they don't believe that it's time right now to consider a second economic stimulus package -- Wolf.

BLITZER: Elaine Quijano at the White House with these bad jobs numbers, which will have spillover, no doubt, on the political campaign..."

http://money.cnn.com/video/#/video/news/2008/09/05/news.090508.roubini.cnnmoney

Roubini: Worse yet to come 2:59

NYU's Nouriel Roubini says the weak jobs report is another sign that the U.S. economy is headed into a prolonged downturn.

• Record 1.2 million homes hit by foreclosure

http://money.cnn.com/2008/09/05/real_estate/foreclosures_rise_again/index.htm?postversion=2008090510

Source: CNNMoney

http://money.cnn.com/

Added On September 5, 2008

http://money.cnn.com/video/#/video/news/2008/09/05/news.090508.roubini.cnnmoney