U.S. layoffs lift jobless to 8.1%

Loss of 651,000 jobs in February signals worsening economic crisis

March 07, 2009|By Mike Dorning | Mike Dorning,Tribune Washington Bureau

WASHINGTON -The wave of layoffs that pushed unemployment to its highest level in more than a quarter-century last month confronted American workers with the worst job market many have faced in their lives - and gave worried consumers a new jolt of anxiety.

Capping a week of breath-taking stock market plunges, new fears for the survival of the biggest U.S. automaker and fresh concern over the banking system, the government's report yesterday that unemployment climbed to 8.1 percent in February was only the latest sign that the economic crisis is getting worse.

"We still haven't hit bottom yet. That's the hard reality: We're still on our way down," said Diane Swonk at Mesirow Financial.

February was the third straight month in which more than 650,000 workers lost their jobs, and the government revised the job-loss numbers upward for January and for December 2008.

Since the start of the recession in December 2007, 4.4. million jobs have been lost, with more than half the losses coming during the past four months.

The torrent of layoffs not only deprives the jobless workers of spending money but contributes to the anxieties of those who still have work. That in turn could contribute to a downward spiral in consumer spending.

Most economists still think the downward trends will slow and bottom out in coming months, and that the economy will begin to recover - though many think it will be an unusually long process.

Retail sales edged up slightly in February from the previous month, but it was largely because budget-minded consumers migrated toward discount stores, particularly Wal-Mart Stores Inc., which experienced a surge of sales.

The unexpected breadth and depth of the job losses were reflected in the experience of Kelley Moore, 43, who took a job as an administrator at Tellabs Inc. in Naperville, Ill. "I knew they were going through downsizing," she said yesterday. "I asked everyone I interviewed with" whether her position might be a target for elimination. "They said, 'No. No. They can't live without it.' Well guess what? They're living without it." Moore has been looking for work since January, with discouraging results. "I've never experienced sending out so many resumes and not hearing anything back," she said.

The effect of seeing co-workers go through what Moore has experienced is reflected in the way Susan Glogovsky, a 30-something director of design for Carnoustie Sportswear in Irvine, Calif., has reduced her spending.

While her small firm has thus far avoided layoffs, she sees companies in her industry going out of business and several members of her circle of friends have lost their jobs. "Everyone's frightened," she said, describing a change in her life that sounds like something from her grandparents and the Depression.

"Instead of going out for extravagant dinners like we used to, we're having dinner parties where everyone pitches in $10," Glogovsky said. "So if we get a group of six, we can spend $60 - including the wine. A few of us go to the grocery store, and then we cook it together.

"You don't normally charge your friends for dinner, but we still all want to hang out. And you can't spend $200 to have a dinner party anymore." Glogovsky also used to freelance design for a private-label apparel company. But when their primary customer, Mervyns, went out of business, the company's sales declined significantly and Glogovsky lost her side job.

The impact of job losses on consumers is multiplied this time by their pervasiveness, covering blue- and white-collar workers alike, all regions of the country, rural areas and urban areas, and every sector of the economy except health, education and government.

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