Federal Reserve Chairman Alan Greenspan announced in early June that the economy was on an upswing, though American workers might have a thing or two to say about it.
"I suspect the American economy is in an upswing --it's not going to be a dramatic upswing ... but events look increasingly positive,"' Greenspan said at the annual International Monetary Conference. The conference brings together top officials at the world's largest banks to meet with central bankers to talk over problems facing the international financial system.
Greenspan said he expects the recovery to continue, but to be a bit slower than the growth exhibited during the first months of the year. According to the Associated Press, many private forecasters are saying the economy will growth by between 3% and 4% for the rest of the year and that US unemployment, currently at an eight-year high of 6%, should peak at about 6.5% toward the end of the summer and start to decline.
And yet, we continue to hear of corporate layoffs.
For instance, Dow Jones, the company that publishes the Wall Street Journal and other business periodicals, announced at the end of April 29 that it plans to cut 1% of its work force worldwide --or about 100 employees --and already has laid off 40 workers company-wide, including 17 non-editorial positions from South Brunswick headquarters. Company officials said more layoffs are expected in the coming weeks. The anticipated layoffs should bring the total jobs cut to more than 450 since March 2001.
Company officials said the layoffs were necessary due to the current economic slump, which has led to shrinking advertising revenue that has been eating into the company's profits.
Dow Jones is just one of dozens of media companies --and one of literally hundreds of firms across the country --that have been hit by the slumping economy. CNN, MSNBC.COM, MTV, Reuters, the San Francisco Chronicle, US News & World Report, the New York Times and others have announced layoffs in the last year or so.
The Washington Post has been tracking layoffs and job cuts across the country since September. It has been keeping a running tally on its Web site (www.washingtonpost.com) that now lists 194 companies that have confirmed work force reductions reaching into the tens of thousands.
Major companies like Bristol-Myers Squibb, Canon and Rexam have announced what are euphemistically called "cost-savings."
B-MS, the pharmaceutical giant, announced in October that it planned to reduce its work force by about 5,000 workers. Canon, maker of copiers, cameras and computers, has closed a California plant (plus one in Mexico) and cut a total of 800 jobs since last year. And Rexam, an international packaging firm, closed two plants in the last year.
The retail sector is being hit, as well. Sears announced in October that 4,900 salaried jobs were to be cut, with most of the damage occurring in Chicago.
Kmart is in bankruptcy and plans to cut 22,000 jobs and will be closing dozens of stores. Staples is closing 30 stores. CVS is closing 200 stores.
That's a lot of jobs lost and could help explain why the unemployment rate reached that eight-year high in April, with 6% of those looking for work unable to find any.
But it doesn't explain the peculiar optimism expressed by many economists about the economy. Yes, the nation experienced modest growth in its Gross Domestic Product (the some total of the value of all goods produced) during the first quarter of 2002 and about 82,000 new jobs were created in April, according to the federal Department of Labor.
But this economic growth has not translated into the volume of new jobs that is needed to get us back to where we were early last year. A total of 8.6 million people were unemployed and looking for work, which is greater than the population of New Jersey.
According to the Economic Policy Institute, a liberal think tank, the growing unemployment rate offers "further evidence that the labor market is still struggling to pull out of the recession that began in March 2001."
EPI said the nominal growth in new jobs was helped by a downward revision in payroll data for the month of March. Because of that revision, "April marked the first month of positive employment growth since July 2001."
EPI also said that "Unemployment durations --the time spent unsuccessfully seeking work --are also climbing, and the absence of pressure in the labor market has led to average hourly wage growth that is no longer surpassing inflation." EPI said that people who have unsuccessfully been seeking work for 27 or more weeks now make up 17.6% of those without jobs and that "over the past three months, this share is up 3.7 points, a larger three-month gain than was seen in either of the last recessions." EPI said the average number of weeks spent unemployed is now 16.6 and is "up more than four weeks since unemployment bottomed out in October 2000."
"Thus, the weak labor market has meant an extra month of unemployment, on average, for those unsuccessfully seeking work," EPI said.
EPI said that "the current rate of economic growth is too slow to generate enough jobs to keep unemployment from rising in coming months" and that "unless growth picks up soon, the US risks the danger of a jobless recovery."
And yet, we continue to hear comments like these from economists like Sung Won Sohn of Wells Fargo Bank (quoted in the Washington Post in May):
"The fact that the labor force has been rising, boosting the jobless rate, is not a bad sign. As the economy expands, creating more jobs, people are coming out of the woodwork looking for jobs. This is the main reason why the jobless rate is a lagging economic indicator."
It has nothing to do with nearly 200 companies who have either laid off workers or eliminated jobs in other ways since September.
A headline in the Wall Street Journal in May neatly wrapped up this sensibility: "Productivity leap shows potential of US economy. Rise at 8.6% pace, positive for profits, doesn't bode very well for employment."
Apparently, corporate profits are more important to economists than employment.
Tell that to the people who used to work at Dow Jones and Bristol-Myers Squibb who are now looking for work.
Hank Kalet is a poet and managing editor of the South Brunswick Post and the Cranbury Press, where a version of this column appeared. Email firstname.lastname@example.org.