WORLD> America
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WORLD> America
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62,000 jobs lost in US, off nearly half-million for year
(Agencies)
Updated: 2008-07-04 11:40 When it comes to handling the economy, 32 percent prefer Democratic contender Barack Obama, while 28 percent want GOP rival John McCain, according to a recent AP-Yahoo News poll. "Far too many Americans will spend this holiday out of work and struggling to provide for their families because of the failed policies of the last eight years," Obama said Thursday. "Americans across this country are hurting and today's jobs numbers are just the latest indication," McCain said. "Washington can no longer abdicate its responsibility to act. Our focus must be clear: enact policies to create jobs today." Other economic news revealed more weak spots. The number of newly laid off people signing up for unemployment insurance rose sharply last week. New applications jumped by 16,000 to 404,000, the highest level since late March. The US service sector - generally an engine for the economy - contracted in June. The Institute for Supply Management's index of the service sector fell to 48.2 in June from 51.7 in May. A reading below 50 signals activity is shrinking, while a reading above that suggests activity is expanding. "The economy will get worse before it gets better," said Sung Won Sohn, an economics professor at California State University. On Wall Street, investors took the latest batch of economic reports in stride. The Dow Jones industrials closed up 73.03 at 11,288.54. In political circles, though, the latest news spurred calls from Democrats to take more steps to aid the economy. The Bush administration thinks the government's $168 billion stimulus effort, including the rebates, should be sufficient but hasn't ruled out further action. With inflation concerns growing, the Federal Reserve last week ended an aggressive interest rate-cutting campaign, started last September to shore up economic growth. Fed Chairman Ben Bernanke and his colleagues are caught between risky crosscurrents of plodding economic growth and spiraling energy and food prices. Lowering interest rates further could worsen inflation. But boosting rates to fend off inflation could hurt the fragile economy. Given the state of the job market and continued damage from the housing slump, the Fed probably will leave rates alone when policymakers meet on Aug. 5, some economists suggest. On the other side of the Atlantic, the European Central Bank boosted its key interest rate Thursday in an effort to rein in escalating inflation. In the US wage growth for workers is slowing. Average hourly earnings grew by just 3.4 percent over the past 12 months, the smallest annual increase since January 2006. Paychecks aren't stretching as far because prices for gasoline, groceries and other things are rising more quickly. Oil prices on Thursday briefly touched a new high of $146 a barrel, while gasoline prices hit a new record of $4.10 a gallon, according to AAA, the Oil Prices Information Service and Wright Express. Some economists fear that when the energizing force of the tax rebates fades, the economy could be in for another rough patch especially if job and wage growth continue to falter. There's been a lot of talk about whether the economy is on the brink of, or has fallen into, its first recession since 2001. The unofficial determination, made by a panel of academics, usually comes well after the fact. The panel takes into account economic activity, as well as employment, income and other things. Brian Bethune, economist at Global Insight likened the current situation to "a slow-motion recession. It's kind of like a recession by a thousand cuts." |
