US Chief Executives Gloomy as Jobless Claims Surge

07 April 2008

NEW YORK: Pessimism reigns at both ends of the economic pecking order, according to two reports published stateside last week.

The first of these, in Chief Executive magazine, revealed that a majority of that ilk anticipate a fall in US employment levels over the next 4-5 months.

In a poll of 321 ceos between March 11-26, a majority opined current conditions to be "bad." The magazine's monthly confidence index stood at 84.1 in March – a swingeing 25.3 points lower than February and down by half since July, shortly before the subprime credit crunch struck.

The figures compare with a base number of 100 when the index began in October 2002 and a peak of 182.4 in January 2006.

Other boardroom concerns are a feared slowdown in demand for companies' products and services; access to capital; increasingly costly energy costs and the prospect for higher corporate taxes.

  • Adding to the gloom, the Labor Department reports that initial jobless claims last week rose 38,000 to 407,000 — the highest in three years.

    The US economy lost 80,000 jobs in March, the largest plunge in five years, as weakness in the labor market spread beyond housing and finance to contaminate a broad swath of businesses.

    According to the Labor Department, the drop in employment was the third consecutive monthly decline. Moreover, revised data showed that employers cut 76,000 jobs in both January and February, more than was previously thought.

    Taken together, the numbers represent the most compelling evidence to date that the economy has slipped into a recession.

    The unemployment rate jumped to 5.1% last month from 4.8% the month before. Bear Stearns' economists [who, hopefully, are continuing to get it wrong] say that a rise of that magnitude has never before occurred in the post-war period without the economy being in recession.

  • Data sourced from USA Today/Reuters; additional content by WARC staff