Reports on Job Losses, Consumer Confidence Pile on More Bad News

By KEVIN G. HALL

By Kevin G. Hall

McClatchy Newspapers

WASHINGTON

Recession fears mounted Friday after new data showed that employers shed 63,000 jobs in February and a private-sector index pointed to sagging consumer confidence amid sinking stocks and rising prices for oil and gasoline.

For the second consecutive month, employment was in negative territory, a trend most often associated with recession. The Bureau of Labor Statistics also issued a new count of how many nonfarm payroll jobs were lost in January, boosting the count to 22,000 positions, from 17,000. The losses stood in stark contrast to the forecasts of most mainstream economists, who’d predicted an increase of about 25,000 jobs in February.

The steep job losses brought President Bush out for a statement in front of White House cameras. He said that last month’s economic stimulus package, including tax rebates to consumers, should improve the economy in coming months.

“I know this is a difficult time for our economy, but we recognized the problem early and provided the economy with a booster shot,” the president said. “We will begin to see the impact over the coming months.”

Afterward, a Treasury Department statement sought to talk up the economy. With oil hovering around $105 a barrel and the cost of wheat, corn and other commodities driving up food prices, the Treasury stressed that the core inflation rate remained contained at 2.5 percent.

It was an odd choice for positive news, because core inflation doesn’t include the high prices in the volatile food and energy sectors. In effect, this measure of inflation ignores the record prices that Americans are paying at the gas pump and the grocery store. The latest reading of the consumer price index, which measures what Americans pay at the cash register, was almost double the core rate and stood at 4.3 percent for the 12-month period that ended in January.

The head of the president’s Council of Economic Advisers left open the possibility of a recession.

“We are going to have a weak-growth quarter, and whether you call that a recession or not is something that we won’t know for many months,” Ed Lazear, the council’s chairman, said at the White House.

Many economists disagreed.

“Sure looks like a recession, with exports remaining the only bright spot in the U.S. economy,” John Silvia, chief economist for Charlotte, N.C.-based Wachovia, said in a note to investors.

Later, in announcing a conference call to revise their forecast, Wachovia’s economic researchers wrote: “We now expect the U.S. has entered its first recession in seven years, as economic activity likely contracted in the first quarter.”

Nigel Gault, chief U.S. economist for forecaster Global Insight in Lexington, Mass., was equally blunt.

“The debate should no longer be about whether there is or is not a recession, only about how deep it will be,” he told investors. “Private employment has now fallen for three months in a row, according to today’s new data, with the steepest decline in February.”

Billionaire investor Warren Buffet, considered the richest man in the world, said Monday that the U.S. economy was in what would be a short recession.

A textbook definition of recession is two consecutive quarters of negative economic growth. Recessions are dated after the fact by the National Bureau of Economic Research, which defines recession as a significant decline in economic activity spread across the economy and lasting several months.

Friday’s dismal jobs report makes it more likely the Federal Reserve will slash interest rates again at its March 18 meeting in a bid to prevent or shorten a recession.

Wall Street, through the futures market, is expecting a three- quarters of a percentage point cut, which would bring the benchmark federal funds rate to 2.25 percent. Banks would follow suit by lowering the prime rate to 5.25 percent.

The job losses aren’t yet in the hundreds of thousands associated with deep economic turndowns. But job losses in consecutive months seldom happen outside of recessions. The last such consecutive months of falling employment were in May and June 2003, when the economy wasn’t in recession.

their take: help’s coming

President Bush spoke on the economy Friday, saying that tax rebates should improve things in coming months.

Ben Bernanke, Federal Reserve chairman, signaled last week that the central bank is prepared to lower interest rates again. Virginia jobs

The job-growth figures for February for Virginia will not be available for three more weeks, said Bill Mezger of the Virginia Employment Commission. He added that states routinely lag behind the country’s employment and unemployment numbers by about that period.

– Tom Shean The job-growth figures for February for Virginia will not be available for another three weeks, said Bill Mezger of the Virginia Employment Commission. He added states routinely lag behind the country’s employment and unemployment numbers by about that period.

– Tom Shean

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