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CNN Saturday Morning News
Interview With Margaret Popper
Aired November 03, 2001 - 09:24 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.
KYRA PHILLIPS, CNN ANCHOR: The nation's unemployment rate jumped sharply last month as employers cut thousands of jobs. And as CNN's Brooks Jackson tells us, the economic damage goes far beyond the airline and travel industries.
(BEGIN VIDEOTAPE)
BROOKS JACKSON, CNN CORRESPONDENT (voice-over): It was the first unemployment report to reflect what's happened since September 11, and it showed the biggest one-month jump in unemployment in 21 years, up 5/10 of 1 percent, to 5.4 percent in October. A loss of 415,000 jobs, far exceeding the 300,000 loss expected by most economists.
As expected, there was a heavy toll in the airline industry. Forty-two thousand jobs, gone. Hotels were hit even harder as travelers stayed home. Forty-six thousand jobs lost. In restaurants and bars, or eating and drinking places, as the Labor Department calls them, another 42,000 jobs lost.
And thousands more jobs lost in auto rental agencies and travel agencies. But bad as the losses were in the travel industry, nearly 2/3 of the job losses were elsewhere. Factory employment, which had been showing signs of recovery, instead suffered its 15th consecutive month of job losses, a whopping 142,000.
And these numbers don't reflect the big layoffs announced, but not yet executed, by aircraft maker Boeing. And temporary workers, first to be fired in a downturn, lost another 107,000 jobs. Construction had been a bright spot, but housing sales are finally slipping. Thirty-thousand construction jobs, gone.
Another bright spot turned sour, oil and gas drilling. Falling natural gas prices mean less drilling. Four-thousand jobs lost last month. And Wall Street of course lost thousands of jobs, including those held by many who died.
And the ripple effects hit thousands who are working. The number of people who wanted full-time work, but were forced to take part-time work instead, rose by 274,000 in October. President Bush said the job loss was regrettable, and urged the Senate to pass his proposed tax cuts to stimulate a recovery.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe we have the ingredients of a good package out of the House. I urge the Senate to work quickly to pass a bill.
JACKSON: But Senate Democrats said what's needed is a much bigger increase than what Bush is proposing in unemployment benefits for those who are out of work.
SEN. BYRON DORGAN (D), NORTH DAKOTA: They, too, are victims of a weak economy, and victims of an attack by terrorists on this country.
JACKSON (on camera): And the worst is not over. Economists say another one million to two million Americans could be thrown out of work in months to come. Some say the unemployment rate could rise to well over 6 percent sometime next year.
Brooks Jackson, CNN, Washington.
(END VIDEOTAPE)
MARTIN SAVIDGE, CNN ANCHOR: We are going to delve even deeper into that grim economic news now with Margaret Popper. She is the associate economic editor for "Business Week" magazine.
Good morning to you, Margaret, thank you for being with us this morning.
MARGARET POPPER, "BUSINESS WEEK": Good morning.
SAVIDGE: Obviously the rise of unemployment not unexpected, but was it as bad as we feared?
POPPER: I think that actually this is not something to be excessively worried about. Unemployment is going to continue to rise, and this was the beginning of that. We had to expect in the wake of September 11 that the numbers would be up.
I think that from here forward, we may see the number rise to 6 percent or even a little bit higher, but you've got to remember that unemployment also lags what's going on in the broader economy. Corporations cut after they get the news that things are slowing down, and as the pickup starts, it takes them a while to start hiring people back.
So this news is kind of to be expected, and I think could be a lot worse. Having said that, I think that we'll see unemployment continue to deteriorate through the end of this year.
SAVIDGE: And what do you think the impact is going to be on the markets?
POPPER: Well, I think the market, to a large extent, has already factored this in, although there is some fear that, as unemployment rises, the consumer really starts to feel it in his or her pocketbook. And that's when people stop spending, and that could bring down demand to a point that hurts corporate profits in an unexpected way.
I think the market is trying to price that in, but it's hard to say to what extent it's got to take that into account. And I think that right now, that means a period of considerable volatility until the end of this year.
SAVIDGE: Well, if you are employed now but you're worried, what jobs, what industries do you think could be hit next?
POPPER: I think it could be pretty broad. It is true that, for example, in the tech sector, they've been doing a lot of cutting, because they really had to make up for this overexpansion in tech. And so it's possible that some of those companies are in better shape than, say, the airlines, which still can't quite figure out what load factor they need to plan for and how much they've got to cut back to accommodate that.
I think also construction is showing some signs of weakening. Again, that sounds scary, but when you consider that we've been reaching record highs in housing prices this year, despite the slowdown, that's not as bad for the overall economic picture as you might think.
Still, if your job is in danger, that's not much consolation.
SAVIDGE: No. You mentioned, obviously, a significant amount of bad news there. Is there any good news out there?
POPPER: Well, I think one good indicator is that the GDP number showed that we hadn't shrunk as much as we thought we were going to. Gross domestic product declined about 0.4 percent according to the advance estimates. That will obviously be revised and will probably come in at a lower number. But it still indicates some kind of economic resilience underneath all of this.
And I think the current market rally is certainly reflecting what is going to be happening next year, because the market looks ahead nine to 12 months, administration that means probably the second half of next year a significant economic recovery.
SAVIDGE: And how can we look upon that date with any certainty, given the fact that things seem so uncertain?
POPPER: Well, that -- that's the problem in this environment. I just -- I don't think there is certainty. There are too many factors here. You've got OPEC countries saying that they're going to cut their oil production. That could mean oil prices could rise. You've obviously got the anthrax threat, and we don't know what other terrorist threat that's lurking over the next couple of months.
And those are certainly factors that could completely upset the apple cart.
SAVIDGE: All right. Margaret Popper, thank you very much for joining us. She is an associate economic editor for "Business Week" magazine. Thanks for being with us this morning.
POPPER: Glad to be here.
SAVIDGE: Wish the news was better.
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