tv Nightly Business Report PBS June 3, 2011 7:00pm-7:30pm PDT
>> tom: hiring slows dramatically and the unemployment rate moves above 9%. the president calls for patience. >> this economy took a big hit. it's just like if you had a bad illness-- if you got hit by a truck-- it's going to take a long time for you to mend, and that's what's happening to our economy. it's taking a while to mend. >> susie: we get the hiring outlook and wall street's reaction to today's dismal jobs report. you're watching "nightly business report" for friday, june 3. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. there is the bad news and the worse news when it comes to the job situation in america. american businesses hired only 54,000 people last month. that's far fewer than the 232,000 jobs created in april, tom. >> tom: susie, the nation's unemployment rate notched up again, rising for the second straight month. it stands at 9.1%, back to about where it began the year at 9% in
january. >> susie: it's also taking longer for out-of-work americans to find a job-- almost 40 weeks, a new high. and the nation's 14 million unemployed are getting new competition-- millions of new high school and college graduates. is the weakness in the labor market temporary or a more serious problem that deserves government action? erika miller reports. >> reporter: they are smiling now, but that could change. millions of college seniors are graduating into a job market dramatically different from when they enrolled. at 9.1%, the nation's unemployment rate is almost double what is was four years ago, and economist bruce kasmin thinks the u.s. labor market could take years to heal. >> the fact that we are not getting enough demand to actually get the labor market kicking into gear here means it's more likely we will have structural high unemployment, and i think is a legitimate thing to be worried about in this economy. >> reporter: it's hard for many to believe that, two years after
the great recession ended, there's still no labor market recovery. economists say 125,000 jobs would have to be added every month just to keep up with population growth. though today's data is disappointing, economist jim o'sullivan still thinks we're on the right track. >> yes, there has been some loss of momentum recently related to the rise in oil and gasoline prices, but much of that rise in oil and gasoline prices has already been reversed. it's erratic, yes, and it's not as quick as we'd like, but we would say we are on track for continued recovery. >> reporter: some advocates for the unemployed are calling for the government to step in with stimulus measures like new tax cuts or a jobs bill, but that's politically unpopular. >> in congress, of course, the mood has shifted dramatically from fiscal stimulus to looking for deficit reduction, and i don't see that suddenly changing because of one employment report. >> reporter: the other debate is whether the federal reserve should pump more money into the economy with a third treasury bond purchase program. most economists say not yet.
>> i think we should let the fed's very easy monetary policy work here-- be a little bit patient. but i do think we need to be recognizing the fact that we are vulnerable here, and if things did materially deteriorate, then i think the equation would shift in favor of stimulus being required. >> reporter: the sobering reality is many americans are settling for jobs they don't want. that's especially true for recent grads. half of those who graduated college in the past five years are working in jobs that don't require a college degree. erika miller, "nightly business report," new york. >> tom: those jobs numbers had wall street in a selling mood, adding to the week's already sizable losses. the dow fell 97 points. the nasdaq lost 40 and a half. the s&p 500 was off almost 13 points. big board volume dropped below a billion shares for the first time this week. nasdaq was just below two
billion. in this shortened trading week, the major averages continued to drop. the dow lost 2.3% for the week, marking a ten-week low. the nasdaq shed the same-- 2.3% compared to a week ago-- and the s&p 500 saw the same kind of drop, down 2.3%. joining us to put it all into persepective, stephen wood, the chief market strategist at russell investment. steve, we saw a lot tlorn at investors this week-- stocks down five weeks in a row for the first time since 2004, does the weakness we saw this week look any different than a normal dip. >> i think it is i think what we are looking at from a multiyear per spec sieve not a v or a w shaped recovery. it's more like a square root sign where we came into a recession pretty dramatically a couple years ago an recovered. but then you platteau out at a lower rate of growth. and i think that plateauing is where we are, where we
will be for a while. and with that you will have some quarters a little better and some not quite so good. the last quarter we have come through was extremely weak and the data has been dripping and drabbing for the last large number of weeks. and this is certainly a slow patch. and probably a significant slow patch in the economic recovery story. and so that's what i think you are seeing in the data over the last large number of weeks. >> tom: so overlay that over the market reaction this week. was what we saw this week part of a normal correction or something else? >> i think so. now our forecasts for the equity markets in the u.s., anyway, is plus nine percent by the end of the year. and you are still about half of that, even given the sell-off concluding today's activities. so you saw a lot of run-up early in the year and a pullback after the japanese quake. then you saw a run-up and you are seeing a pullback now. you are kind of marking time, you know, given all the data of that you've seen this is not terribly surprising reaction by the market. >> tom: let's use history as a guide because the last
time we saw the economy add so few jobs was last summer. last summer you remember was a choppy time for market investors. do you anticipate that same kind of chopiness this summer? >> i think so i think volatility will be your travel companion for a while. these going to be very choppy markets. like i said, i think we scratch out a reasonable rate of return on equities this year but it is not going to be pretty or smooth to get there. we're in that soft patch. there is going to be some chop in the data there is the international environment in japan, middle east. there's the greek in the ongoing european debt crisis. so there is a lot of headlines that could create some volatilityity in market performance. >> tom: stick around, steve, are you our market monitor tonight so we'll find out how your view of the economy and the market plays out in this economic investment strategy later on in the program. >> susie: still ahead, a bright spot despite that gloomy jobs report. we hear one man's story of finding work in our ongoing series, "you're hired!" >> tom: what is washington doing to create jobs, or at least help the economy gain momentum? we spoke with obama economic
advisor austan goolsbee shortly after the employment report was released. washington bureau chief darren gersh asked whether the new numbers show the economy has hit a soft patch. well, look, we face some tough headwinds in the beginning of the year and the growth raise slowed down. we knew that. i said last month when we were well above expectations for jobs and this month when we are below, you never make too much out of any one month report. what you want to do is look at slightly longer trends. and you if look over the last six months the private sector has added more than a million jobs. so i think that's the trend we want to continue and to accelerate. most of the private sector forecasters are anticipating a rebound of growth for the second half of the year. and so i think our, that is what our effort is now. the president is up every day, how do we get the growth rate up.
let's get people back to work. >> gas prices have obviously been an issue for the economy, also the supply disruptions from japan following the earthquake. take those one at a timement how big an impact have they had? >> well, look, what caused what we are seeing now is a slowdown of the growth rate. and i think that the headwinds of gas prices, of the japanese supply chain, of some of the european financial issues have been serious. they slowed down the growth rate. but we still added more than a million jobs in the private sector in the last six months. we've added more than 2 million jobs over the last 15 months. and that's been relatively broad-based. so i think that the trends are what matters. there is always going to be bumps in the road but, you know, we've got to just keep the economy growing. >> the market's pricing in or seems to be signaling that there might be a risk of a dip back into recession. how real is that? >> this is not a double dip recession. i don't think the market is pricing that in. i think the fact that we've
added a million jobs in the last six months looks nothing like a double dip recession. most of the private forecasters are seeing a fairly strong rebound in the second half of the year. >> but are the tools to do more about job growth, are they off the table. the standard tools seem to be more from the fed or more fiscal spending or more kind of tax cuts. are those all off the table right now? >> well, look, the government as center piece of the economy's growth is shifted out of that phase. that was rescue phase. now the private sector is got to be the center piece of our recovery. so the president passed substantial tax incentives for business investment. passed a payroll tax cut for $1-- 150 million workers. those things have and will continue to put additional help into the economy. he's looking to try to reduce the regulatory burden and streamline and get rid
of outmoded regulation. he's trying it to push a balanced deficit reduction plan to restore confidence in that area for the next ten years. but this is one in which we want the government to phase out its role. we want the private sector to be standing up. companies have been profitable. they've accumulated money. i think now our effort is to try to get people into a mind-set of business confidence so that investment is the order of the day. >> austan goolsbee, the chair of the council of economic advisors, thank you for your time. >> thank you. >> susie: meanwhile, house republicans were promoting today their own plan of action to stimulate job growth. they want to ease regulatory burdens on small businesses and fix the tax code permanently, and house majority leader eric cantor today invited the president to get on board. >> this president continues to give speeches as if he is there for the middle class and the small businesses, but somehow the rhetoric falls short because the actions have seemed to
hinder job growth and entrepreneurial activity. we want to continue to push forward in this area and welcome the president finally to join us, so that we can get america back to work. >> susie: cantor and his fellow house republicans also said today's jobs report stressed the need for the white house to get serious about cutting spending and dealing with the ailing economy.
>> we didn't see the stiffest selling of the week but nonetheless weakened to a weak week for the stock indices. let's get you updated with tonight's market focus. the major stock indices spent the entire session in the red, with the selling picking up as we neared the closing bell. here is how the s&p 500 traded on this jobs friday. let's pull out and roll out. the index opened with a 1% loss, pared that back by lunchtime, but then sank again into the close. let's pull out to the past 90 sessions. see what's going on here. with the selling this week, the index has fallen below its april low and is at its lowest price since late march.
this is a significant break to the downside. energy was the only major sector holding steady. this energy select exchange traded fund was flat. that was actually a pretty good place to be. oil initially fell below $100 a barrel over concerns about demand due to the weak jobs report, but as oil recovered, so did the energy sector. cell phone tower operator american tower led the worst sector today-- telecom. shares of a-m-t fell by almost 6%. volume increased six-fold. what's going on here is the securities and exchange commission has subpoenaed the company over tax accounting practices. the company says it will cooperate. shareholders not sticking around. newell rubbermaid couldn't bounce back from a tough economy. the company cut its forecast thanks to weaker consumer spending. look at this move down. volume jumped while the stock price dove-- down almost 12%. the drop pushed rubbermaid to within less than $1 of its 52- week low. with this fall today.
a couple of other consumer companies also saw their share of selling. home fragrance and decor company blyth dropped 14.5%. similar to rubbermaid, it cut its earnings outlook due to and appliance maker whirlpool fell almost 5% to its lowest price of the year. one worry for investors this week was european debt, as european zone officials said greece will probably get another package of financing. that reassurance didn't help u.s. stocks, but it did help the u.s.-traded shares of the national bank of greece. volume doubled as the stock rose almost 8%. still, the stock is only a third of the price it was at this high in august. while we're overseas, u.s.- listed chinese stocks took a hit, especially internet firms. sina dropped more than 10%. baidu was down almost 4%. travel services firm c-trip shed almost 2%. there is market talk that china's central bank may again raise interest rates to attack inflation. drug developer orexigen hit a new 52-week low, losing a third of its value today.
look at this big drop. it is suspending the u.s. development of its experimental diet drug. u.s. regulators wanted more testing. shares have been on a wild ride as it has tried to get f.d.a. okay for its medicine. two other firms working on similar treatments also fell. vivus and arena fell by 3% and 2% respectively. these two have been unsuccessful bringing their drugs to market so far. and that's tonight's "market focus." >> susie: more on tonight's top story. while the nation's headline unemployment rate is just over
9%, dig deeper and you'll find the situation looks much worse. here's the math: start with may's unemployment number, 9.1%. throw in discouraged workers, or people so fed up with looking for a job they've given up, and that rate moves above 10%. add the under-employed-- people taking any job they can get, despite their skills-- and the real unemployment rate jumps to almost 16%. and for many people, the job hunt has gone from weeks to months. almost half of unemployed americans over the age of 16 have been without a job for 27 weeks or more. >> tom: here's what we're watching for next week: our friday "market monitor" is lew piantedosi, lead portfolio manager at eaton vance management. the world bank updates its global economic outlook, and we'll get a snapshot of economic activity around the country from the federal reserve's beige book report. monday, it's tech times two!
apple and microsoft both unveil new products. >> susie: the nation's high unemployment rate is taking a toll on wal-mart. the world's biggest retailer is seeing what it calls a "paycheck cycle." that's where people stock up on pay day and spend less on other days. wal-mart's c.e.o. says the phenomenon is more pronounced than ever. separately, wal-mart announced a $15 billion stock buyback. with the company's stock price in a rut, it's been returning excess cash to shareholders in share repurchases. >> tom: the details surrounding the federal reserve's rescue of bear stearns in the spring of 2008 will remain sealed. a federal appellate court ruled today the central bank's board of governors does not have to release those records. a former f.d.i.c. official had sued to make them public. he wanted details on why the fed thought bear's emergency funding was necessary, but the court said revealing that information would undermine the federal reserve's ability to function.
as we heard earlier, the job market may have slowed, but that hasn't spoiled the stock appetite of tonight's "market monitor." stephen wood is back with us. he's chief market strategist at russell investments. so he's back at it now with an investment strategy. what does your slower growth outlook mean for strategy,
stocks versus bonds? >> yeah, you're probably in a lower return environment and a slower economic growth rate. we don't think it's going to be a recession but it will be a more difficult environment. and i think what that's going to look at it is a globally diversified portfolio, one. and i think also will you have to have more equities in your portfolio than a lot of people might have expected. and this would account for people approaching requirements, perhaps even people in retirement that you had will have to have more risk assets, more global, more equities, perhaps more commodities, more infrastructure than they would have accepted-- anticipated to generate the rates of return that they are going to need. >> tom: one you brought along for a new pick is one that has been raising its dividend. that is a little bit of a idea that a lot of folks have globd on to lately. jpmorgan is the stock, right, the banking stocks have gotten the okay to raise dividends what do you like about jp morian-- morgan in this environment. >> i think you have an industry leader. someone who came through the economic crisis extremely well. was something of a stabilizing force. and you also see that as financial regulation,
becomes more clear, you are going to get the ability to understand which financials are doing better. you have strong balance sheets. great portfolio. and you know, they're a consumer-based good old-fashioned deposit coming and doing good old-fashioned banking is a good chunk of their revenue and the dividend issue is something that is not unimportant either. >> tom: you also like health care which has been a pretty good performer this year. pfizer is your pick here, pfe, the ticker symbol, has had a nice really's that year. what to make it continue? >> part of that chop we were talking about earlier in the broadcast, that we think the economy is going to do okay but it won't do fantasticment and it will do it with a lot of volatility. so in that environment we've dialed on a little bit of our risk ex-- risk exposure given the chopiness in there. and health care and pfizer, for example k kind of level out that volatility. the benefit there is you get people more likely to stay fully invested for a longer period of time so that is more-- . >> tom: give me 20 seconds
on qualcomm, one that is on perhaps the other side of the risk parameters. this can be a pretty volatile stock. >> it can be. very quickly, technology companies, like qualcomm, clean balance sheets, not a lot of debt. not really exposed as much to the u.s. consumer and the jobless numbers are you looking at and can take care of a lot of efficiencies. we like equities. we like u.s. equities and people are just going to have to get comfortable with riding out the volatility for a more disciplined long-term time horizon. >> tom: let's look at the scoreboard for you. october 15th, the last time you were with us. google since then down 13%. you also liked occidental petroleum, up 22.7%. and stanley black & decker the toolmaker has had a rally, up almost 11%. dow still like the trio? >> we still like that trio. stanley is a name still in our portfolios. and we still have a lot of confidence in. we've taken the opportunity in occi to trim back a little bit but again very strong name. and googem-- google in terms
of industry leader there are a lot of issues, international and also domestically but longer term that is probably a name that will continue to be the 500 pound gorilla in its face. we feel comfortable with those names. >> tom: how about disclosures tonight. >> i own they personally as well as the russell fund. >> tom: stephen wood with russell investments. >> susie: finally tonight, if you think unemployment above 9% is bad, you might be surprised to know the jobless rate for visually impaired people is much worse. seven out of ten blind americans are out of work-- a whopping 70% of that population! but, in our continuing series "you're hired," we hear from one man who says new technology helped him beat the odds. >> my name is kerry d. walker. i subcontract with prime contractor deloitte, and i'm an oracle support technician. i initially received a degree in computer science and math, and secured a position at i.b.m.
after being there for approximately a year, i noticed i was having a little difficulty with my vision. i left i.b.m., started myself a nonprofit, and i looked into companies like columbia lighthouse for the blind, and n.i.b.-- national industries for the blind-- to see what kind of opportunities might be available for an individual in my situation. i found that i could stay in the i.t. field, because they offered assessments which provide you with the opportunity to learn about assistive technology. the technology that i use is called jaws. every step of the way, jaws is reading each key, allowing you to know where you are in the process. i received an email saying c.l.b. was looking for an oracle
support position. got the interview, they liked what they saw. they saw i was qualified. they made me an offer, and i accepted. i think some of the notions about individuals with low vision or visual impairments are preconceived. you wonder, "how can you do that if you can't see this, or you can't read this, how can you accomplish it?" the way the technology is moving now, it's wonderful because the playing field is level now. almost anything a sighted person can do, a person with a visual impairment can do as well. >> susie: that's "nightly business report" for friday, june 3. i'm susie gharib. have a great weekend everyone, and you too, tom. >> tom: good night susie. i'm tom hudson. good night everyone. we hope to see all of you again next week. "nightly business report" is made possible by: