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Job numbers unlikely to bring economic cheer
Wednesday, November 04, 2009 3:57 PM


(Source: Chicago Tribune)trackingAlthough investors have been pocketing several tidbits of good news about the economy since March, jobs numbers have not been among them.

And Friday's unemployment figures are not expected to provide significant encouragement, either. Although job losses have not been as extreme as they were late last year, when more than 500,000 jobs were being eliminated each month, massive layoffs are still occurring. Johnson and Johnson announced thousands of job cuts Tuesday, and economists are expecting the unemployment rate in October to increase to 9.9 percent. That's far higher than the 6.3 percent high after the 2001 recession, and Treasury Secretary Timothy Geithner said last week he is expecting unemployment to continue to rise in the months ahead.

Even if unemployment peaks next year, healing is expected to take years.

In part, that's because the economy is projected to grow at a lethargic pace in the coming months as businesses have trouble borrowing money and individuals curb spending without the billions in home refinancing cash that helped them after the last recession. It's also because of changes in the economy, as manufacturers close and technology helps businesses do more with less.

"In prior recessions before the 1990s, once the economy started growing, employment bounced back," said Sophia Koropeckyj, managing director of Moody's Economy.com. "People were temporarily laid off and when sales increased, companies brought employees back to work."

But now that's less likely _ prompting the term "jobless recovery."

"Now, manufacturing jobs are lost ... facilities have been closed completely and people who have lost those jobs are going to have a harder time finding jobs they are qualified for," Koropeckyj said.

Consumer confidence data suggests few people believe jobs are "plentiful." Analysts expect the economy to be sluggish for months because people without jobs or those afraid of losing them are unlikely to spend freely. Consumers are the backbone of the economy, and corporate profits _ and consequently stock prices _ suffer when people don't spend.

Meanwhile, the sharp layoffs have taught companies that they can adapt to the weaker economy.

"They found ways that worked pretty well, so jobs won't revert back," Koropeckyj said.




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