October Jobs Report: A Reminder Economy Remains Fragile 

Employment data released today by the Department of Labor reported 190,000 U.S. jobs were lost in the month of October, increasing the overall unemployment rate to 10.2 percent.  Retail job losses closely mirrored job losses reported in September, edging downward slightly, noted the Retail Industry Leaders Association (RILA).

“Today’s job report is a clear reminder that the U.S. economy remains fragile but considerably more stable than it was a year ago,” said Casey Chroust, RILA executive vice president for retail operations.

The average of 188,000 jobs lost per month in the overall economy over the past three months is down considerably from the 700,000 per month pace of job loss at the depth of the recession. 

“The most effective consumer stimulus is a steady job, and thus on the heels of recent positive indicators today’s report gives retailers pause,” added Chroust.

The unemployment rate of 10.2 percent and the loss of 190,000 jobs across the entire U.S. economy in October show that the labor market remains weak.  Some recent economic indicators, however, suggest that consumer worry is easing as the U.S. economy stabilizes from the recession that began in December 2007. Today’s data showed that hourly wages rose more than expected in October, which if continued would translate into improved buying power heading into the holiday season. 

Mixed Economic Signals:

Recent indicators further show resilience in family spending.  Monthly same store sales released yesterday by numerous retailers reported positive news as sales edged upward over October 2008; overall retail sales in September showed broad sales gains outside of autos, which was affected by the end of the “cash for clunkers” program; and comprehensive data released last Friday on family incomes and spending in September likewise show spending gains outside of autos.

Retail Data:

The retail industry shed 39,800 jobs last month, a slight improvement over the 44,200 retail jobs lost in September and considerably better than the 90,800 jobs lost in November 2008.  The retail industry averaged 35,000 job losses over the past three months, compared to an average of 54,500 over the same period last year. 

“Today’s data show a weak job market and unacceptably high unemployment, but the slowing pace of job loss indicates that the U.S. economy is stabilizing from the recession,” said Phillip Swagel, visiting professor at the McDonough School of Business at Georgetown University and RILA outside economist.  “American families are still being cautious, but increased spending since the summer suggests that they are starting to peek out from the covers they hid under during the worst part of the financial crisis and starting to spend again.  Today’s data further shows gains in hourly wages, which could help boost spending in the holiday season.”

Health Care Reform:

An economic bellwether, the retail industry today directly represents 14.6 million American jobs and touches the lives of millions more every day. Job retention and creation in the retail industry is a critical element of America’s economic recovery.  Costly burdens, such as those imposed by  the health care reform legislation under consideration this week in the U.S. House of Representatives, could undermine that recovery and cost more jobs for the retail industry, while also pushing insured retail employees from the health care plans they currently have and like.

“The retail industry is committed to meaningful health care reform that reduces the unsustainable systemic costs faced by employers and beneficiaries today. Unfortunately, today’s employment reports are a clear reminder of the fragile state of our economy.  The House reform bill would not only jeopardize retailers’ ability to create and retain jobs, but also undermine their ability to provide employees with quality affordable health care benefits,” said John Emling, RILA senior vice president for government affairs. 

The Retail Industry Leaders Association is the trade association of the world’s largest and most innovative retail companies.  RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Phillip L. Swagel is a visiting professor at the McDonough School of Business at Georgetown University, where he teaches classes on financial markets and directs the Center for Financial Institutions, Policy, and Governance.  He is also a non-resident scholar at the American Enterprise Institute.

Dr. Swagel was Assistant Secretary for Economic Policy at the Treasury Department from December 2006 to January 2009.  He has previously taught at the University of Chicago, Booth School of Business and at Northwestern University, and held positions at the President’s Council of Economic Advisers, the International Monetary Fund, and the Federal Reserve. 

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