Economic Development Council Policy Review
May Edition 2008
Fear of Recession Causes Employers to Make Drastic Job Cuts
March saw the largest increase in job cuts in five years top out at 80,000; 30,000 more than anticipated for the third straight month of losses. January and February added to this with 76,000 job cuts each month. Unemployment rates also rose from 4.8 % to 5.1%; indicating that a recession might already be occurring. The Labor Department states that a “trio of crises” – housing, credit and financial sectors has inflicted companies and jobseekers as well as the economy as a whole. The Federal Government has already taken drastic steps in aid such as cutting interest rates several times, providing financial backing to JP Morgan’s takeover of Bear Stearns and opening an emergency lending program for big investment houses.
Construction, manufacturing, retailing, financial services and business services all racked up job losses. These losses tend to overshadow the gains in education, healthcare, leisure and hospitality. With the economy the way it is, business are having to curb spending, capital investment and hiring which lead to further weakening of the economy.
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Institute of Government and Public Affairs’ Illinois Economic Review
Manufacturing Hits Keep Coming
The slow economy continues to take its toll on manufacturing. Rising oil and gas prices are hitting manufacturers where it hurts. The weakness in orders was led by a 4.6% drop in orders for autos due to the soaring gasoline prices and the weakening economy. The Institute of Supply Management released a report that the national Production Manufacturing Index was at 48.6, slightly above expectations. The report is based on a number of indicators including new orders, inventory levels, production, supplier deliveries and the employment environment. And index measurement above 50 shows growth, while anything below 50 indicates contraction. February had a reading of 48.3 which was the lowest in 5 years since the index fell to 46.1 in April 2003. The slowdown is mostly due to a decrease in imports and new orders and an increase in prices. The high prices of steel and fuel are having a direct effect on many manufacturers.
Orders to factories for large manufactured goods also fell for a third straight month in March, the longest string of declines since the 2001recession. The Commerce Department states that the demand for durable goods dropped by 0.3% last month. Orders haven’t fallen for three consecutive months since February to April of 2001 when the country was sliding into the last recession. Construction spending also dropped 0.3% in February as home building dropped for a record 24th straight month. Total construction spending dropped to $1.12 trillion in February. For more information, click on the following stories:
Manufacturing Hit Below the Belt, Again
Manufacturing Activity Declines in March
Many States Including Illinois Appear in Recession
Whether or not the national economy is in recession is beside the point for many states claims a report by the National Conference of State Legislatures. States such as Illinois, California and Florida are experiencing a weakened economy this fiscal year. Discretionary incomes are being consumed by higher fuel and food costs and the slumping housing market means less money going to furniture and appliances associated with buying a house. Illinois is facing an estimated $750 million shortfall in its budget this fiscal year. The administration has already suspended scheduled state payment for agricultural, environmental and other obligations.
By mid-April, 16 states reported shortfalls in their current budgets as the revenue those budgets were built on fell short of estimates. Next year’s fiscal year looks to be even worse with 23 states reporting budget shortfalls totaling $26 billion.
Many States Appear to be in Recession
Illinois Chamber Survey for Illinois Manufacturers
The Illinois Chamber's Economic Development Council’s Manufacturing Committee has developed the following survey for Illinois manufacturers. Through meetings, public input, and research, Manufacturing Committee members have identified a potential need to make young people aware of career opportunities in manufacturing. Unfortunately, outdated images and misunderstandings about modern manufacturing have cause young people to seek non-manufacturing careers. To make matters more difficult, these decisions are being made at a time when manufacturers need an educated and skilled workforce.
We believe that the Illinois Chamber of Commerce can play an important role in sending out a positive and correct message about the opportunities that exist within modern manufacturing by developing a program which links real needs with individuals interested in pursuing careers in manufacturing.
Your input is extremely important to the Illinois Chamber of Commerce and its members. We value your privacy and assure that all responses are kept confidential and used for informational purposes only.
Taking this survey is quick and easy. We appreciate your time and thank you for the feedback! Please click the link below to start the survey. Click here to take survey.
U.S. Department of Commerce to Hold National Summit on Economy in Chicago
The 2008 National Summit on American Competitiveness will convene the nation's premier leaders of business, government and academia on what steps the public and private sectors can take to secure America's position as the most competitive economy in the 21st century and beyond. For more details, click here.
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