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CNN Sunday Morning
Job Market Remains Bleak
Aired May 11, 2003 - 09:15 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.
ARTHEL NEVILLE, CNN ANCHOR: The jobless rate, right now, is 6 percent and that aspect of the economy doesn't seem to be improving, even as other segments do. CNN's Kathleen Hays takes a look.
(BEGIN VIDEOTAPE)
KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Stephen Goldschein is in the hardest hit area of the nation's economy.
STEPHEN GOLDSCHEIN, SYSTEMAX, INC: Wow, that's nice.
HAYS: The beaten and battered tech sector. But, in many ways, he's typical of businessmen across the country. He's managed to get his computer direct marketing company through tough times in, large part, by laying off workers.
GOLDSCHEIN: I would say in the U.S., we've reduced our work force, in total, by about 30 percent.
HAYS: And he doesn't plan to add employees anytime soon. The problem is Goldschein's customers aren't buying; they're in the same cautious cost cutting mode that he is.
GOLDSCHEIN: They have their foot on the brake when it comes to capital spending. They don't see a need to upgrade computers at this point, they can make due with what they have. And, it's interesting to me, that it's really an across-the-board kind of thing from the littlest to the biggest companies, they're saying the same thing.
HAYS: Economist Alan Krueger says an overly high level of business caution is the problem.
ALAN KRUEGER, ECONOMIST: It's a big investment to bring on workers. They're concerned that if they're just seeing a cyclical blip, in terms of their own demand, that it may turn around. So, I think until they're more confident that the growth is strong, they'll continue to make do with relatively fewer workers.
HAYS: Krueger, like other economists, believes the U.S. economy is no longer in recession. The problem is, the past two quarters; it has only grown at a 1.5 percent rate. Economists say growth has to be twice that much to generate the new orders firms need to see before they add new employees. Larry Meyer is a former Federal Reserve governor who shares fed Chairman Alan Greenspan's view that with the war over, the economy will pick up in the second half of this year as businesspeople regain confidence. But, he says there's a lot of uncertainty around that forecast and if jobs don't start growing, all bets are off.
LAURENCE MEYER, ECONOMIST: As the economy continues to lose jobs, it's difficult to generate the income to support the consumption that keeps the economy moving forward. So yes, it's a tremendous drag on the economy. How long can you continue growing at 1.5 percent and losing jobs before the economy sort of tips over and slips back into recession, I think that would be the concern.
HAYS: Another concern is intense competition that's putting downward pressure on prices. Lower prices mean lower profits and that puts pressure on firms to get even more productive by working harder, by working smarter and when that doesn't do the trick, by cutting jobs.
Kathleen Hays, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired May 11, 2003 - 09:15 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ARTHEL NEVILLE, CNN ANCHOR: The jobless rate, right now, is 6 percent and that aspect of the economy doesn't seem to be improving, even as other segments do. CNN's Kathleen Hays takes a look.
(BEGIN VIDEOTAPE)
KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Stephen Goldschein is in the hardest hit area of the nation's economy.
STEPHEN GOLDSCHEIN, SYSTEMAX, INC: Wow, that's nice.
HAYS: The beaten and battered tech sector. But, in many ways, he's typical of businessmen across the country. He's managed to get his computer direct marketing company through tough times in, large part, by laying off workers.
GOLDSCHEIN: I would say in the U.S., we've reduced our work force, in total, by about 30 percent.
HAYS: And he doesn't plan to add employees anytime soon. The problem is Goldschein's customers aren't buying; they're in the same cautious cost cutting mode that he is.
GOLDSCHEIN: They have their foot on the brake when it comes to capital spending. They don't see a need to upgrade computers at this point, they can make due with what they have. And, it's interesting to me, that it's really an across-the-board kind of thing from the littlest to the biggest companies, they're saying the same thing.
HAYS: Economist Alan Krueger says an overly high level of business caution is the problem.
ALAN KRUEGER, ECONOMIST: It's a big investment to bring on workers. They're concerned that if they're just seeing a cyclical blip, in terms of their own demand, that it may turn around. So, I think until they're more confident that the growth is strong, they'll continue to make do with relatively fewer workers.
HAYS: Krueger, like other economists, believes the U.S. economy is no longer in recession. The problem is, the past two quarters; it has only grown at a 1.5 percent rate. Economists say growth has to be twice that much to generate the new orders firms need to see before they add new employees. Larry Meyer is a former Federal Reserve governor who shares fed Chairman Alan Greenspan's view that with the war over, the economy will pick up in the second half of this year as businesspeople regain confidence. But, he says there's a lot of uncertainty around that forecast and if jobs don't start growing, all bets are off.
LAURENCE MEYER, ECONOMIST: As the economy continues to lose jobs, it's difficult to generate the income to support the consumption that keeps the economy moving forward. So yes, it's a tremendous drag on the economy. How long can you continue growing at 1.5 percent and losing jobs before the economy sort of tips over and slips back into recession, I think that would be the concern.
HAYS: Another concern is intense competition that's putting downward pressure on prices. Lower prices mean lower profits and that puts pressure on firms to get even more productive by working harder, by working smarter and when that doesn't do the trick, by cutting jobs.
Kathleen Hays, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
