WORLD> America
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WORLD> America
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Obama promises recovery plan as job losses mount
(Agencies)
Updated: 2008-12-07 08:28 WASHINGTON -- President-elect Barack Obama said Saturday that he has asked his economic team for a recovery plan that saves or creates 2.2 million jobs, a day after the Labor Department announced the US economy is losing jobs at an alarming rate. "We won't just throw money at the problem," Obama said in his weekly radio address and Internet video. "We'll measure progress by the reforms we make and the results we achieve - by the jobs we create, by the energy we save, by whether America is more competitive in the world."
A half-million American jobs disappeared last month, the worst mass layoffs in more than three decades, as the US spiraled downward in what could be the hardest hard times since the Great Depression of the 1930s. Bush administration officials said Friday night that the White House is considering telling Congress as early as next week that it wants to tap the unused $350 billion of the financial industry bailout. It was not immediately clear how the administration might use the money. Obama said his plan would put millions of people to work by "making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s." He also wants to install energy-saving light bulbs and replace old heating systems in federal buildings to cut costs and create jobs. School buildings would get an upgrade, too. "Because to help our children compete in a 21st century economy, we need to send them to 21st century schools," Obama said. Obama said he would announce other details of the economic recovery plan in the coming weeks. He said he would work with Congress to pass the initiative when lawmakers reconvene in January. Obama's remarks come after the Labor Department announced Friday that employers cut 533,000 jobs in November, the most in 34 years. General Motors, one of the Big Three automakers that went to Congress this week for a second time with hat in hand, announced it was cutting even more jobs. "The economy is in a free fall," said Richard Yamarone of Argus Research. "It is as if someone flicked off the switch on hiring." Despite the gloom, investors found a silver lining, betting that so much bad news would force fresh government action to revive the foundering economy. The Dow Jones industrial average rose 259 points on Friday. But economists, staring at 533,000 lost jobs, were anything but hopeful. Since the start of the recession last December, the economy has shed 1.9 million jobs, and the number of unemployed people has increased by 2.7 million - to 10.3 million now out of work. Some analysts predict 3 million more jobs will be lost between now and the spring of 2010 _ and that the once-humming US economy could stagger backward at a shocking 6 percent rate for the current three-month quarter. "It's a mess," said Mark Zandi, chief economist at Moody's Economy.com. "Businesses, battening down the hatches, are concerned about their survival and are cutting workers." Economists predicted the unemployment rate, which rose to a 15-year high of 6.7 percent in November, could soar as high as 10 percent before skittish employers begin hiring again. The jobless rate would have bolted to 7 percent for the month if not for the exodus of 422,000 people from the work force for any number of reasons - going back to school, retiring or simply abandoning job searches out of frustration. When people stop looking, they're no longer counted in the unemployment rate. The rate was at 4.7 percent just one year ago, 6.5 percent in October. Employment shrank in virtually every part of the economy - factories, construction companies, financial firms, accounting and bookkeeping, architectural and engineering firms, hotels and motels, food services, retailers, temporary help, transportation, publishing, janitorial and building maintenance, and even waste management. The few fields spared included education, health care and government.
The United States - already in recession for a year, may not be out of it until the spring of 2010 - making for the longest downturn since the Great Depression, economists are now saying. Recessions in the mid-1970s and early 1980s lasted 16 months. Unemployment peaked at 10.8 percent in 1982, terrible but still a far cry from the Depression, when roughly one in four Americans were out of work. That said, more pain is certainly in store. Fresh evidence: - A record one in 10 American homeowners with a mortgage was either at least a month behind on payments or in foreclosure at the end of September, the Mortgage Bankers Association reported. - General Motors, already pleading with Congress for billions of dollars to survive the month, said it would lay off an additional 2,000 workers as it cuts shifts at three car factories starting in February due to slowing demand for GM cars. President George W. Bush, who used the word "recession" for the first time to describe the economy's state, pledged Friday to explore more efforts to ease housing, credit and financial stresses. "There is still more work to do," Bush said. "My administration is committed to ensuring that our economy succeeds." . Average hourly earnings rose to $18.30, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven't stretched that far because of high prices for energy, food and other items. Federal Reserve Chairman Ben Bernanke is now expected to ratchet down a key interest rate - near a historic low of 1 percent - by at least a half-percentage point on December 16 in a bid to breathe life into the moribund economy. Bernanke is exploring other economic revival options and wants the government to step up efforts to curb home foreclosures. Treasury Secretary Henry Paulson, whose department oversees the $700 billion financial bailout program, also is weighing new initiatives. House Speaker Nancy Pelosi has vowed to have a package ready on Inauguration Day, January 20, for Obama's signature. The measure, which could total $500 billion, would bankroll big public works projects to create jobs, provide aid to states to help with health care costs for the poor, and provide money toward renewable energy development. |
