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American Morning

Jobless Rate Soars to Highest Level in Four Years

Aired September 07, 2001 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We begin this hour with the latest evidence of the slumping economy: Its soaring unemployment figures. Just about 90 minutes ago, the Labor Department released the August jobless rate. And we found that it has surged to the highest level in four years.

CNN White House correspondent Major Garrett joins us with the administration's response to these figures -- Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Well, Leon, the White House says, you know, we warned you that the economy was slowing, and here's the evidence. Not only that, those of you who are CNN archivist viewers might remember that we told you on July 11th after talking to the president's economic adviser Laurence Lindsey that employment would be going up by the end of summer.

Here is exactly what Laurence Lindsey told us back on July 11th: "I would not by surprised," Mr. Lindsey said, "to see 5 percent unemployment by the end of the summer. I would be surprised to see 6 percent."

That was an indication midsummer from The Bush White House that they knew, because the economy was slowing, eventually unemployment numbers would in fact rise.

Here is the tale of the tape: In July, the unemployment rate 4.5 percent, now, at the end of August, 4.9 percent, and privately, administration economic advisers would not be surprised to see even higher numbers -- 5.1, 5.2 percent, maybe even a little bit higher, as the months go on. Why? Well, because unemployment is a lagging economic indicator. When you have lower business investment, when you have a shrinking in consumer spending, eventually, you're going to get higher unemployment numbers. That lower investment spending, tightened consumer spending has been happening for several months, and now we're beginning to see the evidence in higher unemployment numbers themselves.

The president addressed the overall question about the future of the U.S. economy yesterday on the South Lawn, when he appeared with Mexican President Vicente Fox. Here's what he had to say.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If people are interested in growing our economy so that there is more jobs available, then they not only ought to herald the tax relief plan; they ought to be thinking about how to trade a package and the trade package as well. That's important for growth. We ought to be thinking in Washington D.C. how to grow the economy.

(END VIDEO CLIP)

GARRETT: Indeed, other members of the president's very own party are trying to do that. They have asked the president to endorse a reduction in the capital gains tax. They say that that would, in fact, help boost the economy by increasing investment capital in American businesses. The White House is very cool to that idea. They're saying, let's just stick with the existing tax cut, trade promotion authority and an energy plan -- Leon.

HARRIS: The debate on that will continue.

Let's talk briefly, if we can, Major, about President Bush and President Fox. Their meetings are still continuing. How are they going to wrap up the visit here?

GARRETT: Actually we're done at the White House as far as the two leaders are concerned, Leon. President Fox of Mexico had a breakfast this morning with about 40 bipartisan members of the House. He's going to deliver a speech later on today to the organization of American states. But as far as his interaction with the White House, that's done. He and the president had a private dinner at the Blair House last night. That was the culmination of a state visit, one that White House officials believed went very well, did not produce any solid new agreements or any legislative breakthrough, but did, the White House believes, create a brand-new tone about the way that White House and this Congress deals and sees this new Mexican president -- Leon.

HARRIS: That remains to be seen.

Major Garrett at the White House, thanks.

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