US Job Report Keep Fanning Fears of Recession

Sources: Toronto Star, Financial Times

February’s US job report delivered another strike to the already frail US economy. Employers slashed 63,000 jobs in February. That is the most job cuts in five years. The national unemployment rate fell to 4.8 percent from January’s 4.9 percent. This was a product of job seekers leaving the employment force. Additionally, January’s job report was revised from 17,000 lost jobs to 22,000 lost jobs.

This job report, which was worse than predicted, is expected to force the Federal Reserve’s hand in lowering interest rates again. Experts had predicted a net gain in jobs—not a net loss. Commerce secretary Carlos Gutierrez noted, “We are disappointed any time you see a number showing lost jobs...This is consistent with a slowdown.” Those comments were consistent with Bush Administration concerns that the economy is shrinking.

There were gains in several sectors, such as education, tourism, health care, and public services. Those modest gains, however, were overshadowed by massive losses in the manufacturing, construction, and retail sectors. The loss of jobs is clear indication that the US economy is slowing down, and possibly on the way to a US recession.

The US government is attempting to tackle the recession early on. The Federal Reserve has promised $100 billion to alleviate some debt problems. This is in addition to the $160 billion already provided. Furthermore, it may be hoped that the recession may be staved off by the tax rebate checks due in May as promised by the government’s economic stimulus package.

Question: If the economy continues to falter for March and April—will May’s stimulus checks be able to stem the tide of recession?