Businesses Eliminate Jobs Amid Recessionary Fears

[Apr 11, 2008.]

American businesses eliminated 63,000 jobs in February - the highest rate of job elimination in 5 years. Observers noted that the dire employment news may be the biggest sign yet that the nation's economy is veering toward recession.

While the country's unemployment rate actually dropped slightly, to 4.8%, experts said that the decline was due to discouraged workers leaving the work force.

The most notable job cuts came in the fields of building, manufacturing, retailing, and professional services. However, the nation did record an increase in the number of jobs in education, the medical field, and hospitality.

A report from the U.S. Labor Department also indicated that job losses in the month of January were even worse than the government had first projected. Businesses actually slashed 22,000 jobs, up from the 17,000 projected. The period marked the first back-to-back job losses since May and June of 2003, when the economy was still feeling the effects of the 2001 recession.

On the bright side of the equation, working people saw their hourly wages increase to $17.80 in February-that's a 0.3% jump from the previous month's totals. Over the past year, wages have risen some 3.7%. Still, many workers may find their paychecks are being stretched thin. That's because gasoline prices are skyrocketing and food prices are also on the rise. In addition, many employees must struggle with the fallout from the nation's housing crisis, which is being fueled by a hike in foreclosure rates.

Economic growth has been stagnating-in fact, some experts say the economy is actually shrinking. Burdened by increasing mortgage payments, many Americans have become leery of spending. This is particularly troubling since consumer spending frequently drives the nation's economy.

In an effort to reduce the possibility of further financial pain, the chairman of the Federal Reserve Board has indicated that additional interest rate cuts may be on the way.