The nation lost 4,000 jobs in August, the first time employment has shrunk since August 2003. Economists target several factors, but chief among them is the worsening housing market.
According to the Washington Post:
“We did not expect a report as awful as this,” said Ian Shepherdson, chief U.S. economist with the High Frequency Economics consulting firm.
Stock prices fell nearly 2 percent today, as investors concluded that the risks of a serious economic downturn have been heightened. At the close, the Dow Jones Industrial Average was off 249.97 points, or about 1.9 percent, to 13,133.38. The S&P 500 was down 25 points, about 1.7 percent, to 1,453.55, and the Nasdaq was off 48.62, or about 1.9 percent, to 2,565.7.
The article goes on to say that, “employers became more cautious about hiring before any impact of the breakdown of many credit markets in August could be felt.”
The number of construction jobs fell by 22,000. The manufacturing sector lost 46,000 jobs.
Once again, there was little acknowledgment of reality from the White House:
In response to today’s report, the White House noted that the economy had still produced 1.6 million jobs during the past 12 months and that the unemployment rate remained low.
“It’s not the kind of number I’d like to see,” Treasury Secretary Henry Paulson told Bloomberg Television. “Data does not always move in a straight line, so occasionally you will find some surprises. The economy will continue to grow in the second half of the year.”
How to interpret this? “Just sit tight. We’re doing fine, and you should too, eventually, we believe, because, you know, we have faith.”
But there were calls for more:
Others called on the Fed to act.
“Too little has been done to quiet the market’s justifiable fears that things are headed downhill,” said Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee.