
Economy Sheds 80,000 Jobs
Updated from 8:41 a.m. EDT
Three strikes and economic growth is out.
The Labor Department reported the economy lost 80,000 jobs in March, far outpacing the consensus estimate for a loss of 50,000 nonfarm payrolls. The third monthly contraction in a row stokes widespread fears of a recession in 2008 that could be especially painful for consumers and have huge ramifications for the presidential election in November.
The bulk of the losses came in the construction, manufacturing and employment services sectors, the department's Bureau of Labor reported. Nonfarm payrolls have plummeted by 232,000 in the last three months, the bureau said.
Also, the unemployment rate rose to 5.1% in March from 4.8% the prior month. That marks its highest level in over two years, although it's not particularly high by historical standards. Average hourly earnings rose 5 cents in March.
Cramer: Get Over the Jobs Number |
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"Trends are awful," said Ian Shepherdson, chief U.S. economist with High Frequency Economics in a note to clients. "Unemployment will keep rising, squeezing spending."
Shepherdson also predicted that the
Federal Reserve
will lower its key interest rate target by another 50 basis points in April, which would bring it to 1.75%. The Fed reduced its target for the federal funds rate by a total of 125 basis points in January and by an additional 75 basis points at its March meeting. That leaves the current target at 2.25% -- a full three percentage points below its level last summer.
Despite the prospects for more Fed easing, stocks opened lower on the weak jobs report as investors pondered the effects of a recession. The
Dow Jones Industrial Average
was recently down 0.7%, while the
S&P 500
was down 0.3% and the
Nasdaq Composite
was down 0.4%.
In the closely-watched financial sector,
Citigroup
(C) - Get Report
was trading down 44 cents, or 1.8%, to $23.92.
Lehman Brothers
( LEH) was off just two pennies to $43.33, and
Merrill Lynch
( MER) was down 9 cents, or 0.2%, to $45.80.
Meanwhile, mounting recession fears could play in to the hands of Democrats in November, despite their party's prolonged and rancorous nominating race between Sen. Barack Obama (D., Ill.) and Sen. Hillary Clinton (D., N.Y.). In a recent media poll from
The New York Times
/
CBS News
, 81% of respondents said they believed "things have pretty seriously gotten off on the wrong track," up from 69% a year ago and 35% in early 2002.
Such a high level of dissatisfaction could hurt the presumed Republican nominee, Sen. John McCain (R., Ariz.) as he wrestles with the legacy of his fellow Republican, President Bush.
The economy is feeling the effects of the largest price declines in the U.S. housing market on record since the Great Depression, spiking mortgage foreclosures and the financial turmoil they're causing on Wall Street.
In his latest economic forecast this week, Fed Chairman Ben Bernanke
on Capitol Hill that real GDP "will not grow much, if at all, over the first half of 2008 and could even contract slightly," signaling that a recession is possible.








