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January 18, 2008
Pennsylvania Jobs Report Carries Mixed Message
Modest Job Growth, But Rise in Unemployment Mark Report
Keystone Research Economists Call for Federal Action to Forestall Recession
As Pennsylvanians, like most Americans, anxiously read the economic tea leaves to see if the economy is entering a recession, they got a mixed message today from the December jobs report released by the commonwealth's Department of Labor and Industry. The report is available online.
According to the report, Pennsylvania enjoyed modest job growth in December, with private sector payrolls climbing by 3,400. That compares to a decline in national private sector payrolls of 13,000. Less reassuring, the state unemployment rate grew by half a percentage point to 4.7 percent, compared to a U.S. unemployment rate of 5 percent.
Reacting Thursday to the new report, economists at the Keystone Research Center in Harrisburg cautioned that, although the commonwealth is faring better than some states, the future of the state's economy remains highly uncertain.
According to KRC economist Mark Price, "The new data show that the state is losing ground compared with a year ago, and trends in other states suggest where we might be headed."
Price noted that Pennsylvania's unemployment rate reached its low point, below 4 percent, nearly a year ago. Since then, it has climbed almost one percentage point.
Additionally, since the 2001 recession, annual job growth in Pennsylvania peaked at nearly 60,000 jobs per year in 2005. Recent monthly job growth rates are about two thirds as fast.
"Despite some slowdown, Pennsylvania has so far steered between the deeper economic woes to its east and west," said Price.
In New York, New Jersey, and Maryland, the bursting of the housing bubble and an associated drop in consumer spending have resulted in a plunge of state tax revenues totaling $8 billion.
And in Ohio and Michigan, the subprime mortgage crisis and the hemorrhaging of U.S. auto industry jobs have created a toxic cocktail leading to high unemployment rates and high home foreclosure rates.
"To forestall a national recession that would bring the problems of surrounding states to Pennsylvania," Price said, "Washington should take immediate action to stimulate the economy."
Price said federal policymakers should take three steps to revive the economy and steer it away from recession. They are:
(1) Put more money in the pocket of low-income and unemployed workers through extended and more generous unemployment insurance, targeted temporary tax rebates, home heating assistance, and increases in food stamps
(2) Give states a share of federal revenue to shore up state budgets, and
(3) Accelerate planned spending on infrastructure projects and make additional investments in the future, such as energy conservation, that pay for themselves in the long run.
Posted by Price at January 18, 2008 08:02 AM