> BUREAU OF LABOR STATISTICS, THURSDAY, MARCH 22, 2001:
>
> Consumer prices rose more than expected in Feburary, led by higher costs
> for food, clothing and medical care, government figures showed today. The
> Consumer Price Index rose 0.3 percent last month after a 0.6 percent gain
> in January, the Labor Department said. The core index, which excludes
> energy and food, also increased 0.3 percent, matching January's rise.
> While the index rose more than the 0.2 percent expected by analysts,
> sluggish economic growth is prompting companies to cut prices and offer
> discounts to attract customers. Consumer prices "should decline in coming
> months as slower demand restrains inflation for the rest of 2001," says
> the president of the National Association of Manufacturers. Industrial
> production has fallen for 5 consecutive months, and the price report
> "gives the Federal Reserve wider latitude to reduce interest rates again"
> to increase growth, he said (The New York Times, page C14).
>
> Consumer prices rose more than expected for the second straight month, a
> potentially toublesome development as the Federal Reserve tries to focus
> on reviving the economy. The consumer-price index rose 0.3 percent in
> February, adjusted for seasonal variation, the Labor Department said,
> bringing its increase from a year earlier to 3.5 percent. Excluding the
> more volatile food and energy components, "core" prices also rose 0.3
> percent, and are up 2.7 percent from a year earlier. Economists had
> expected both core and overall prices to rise just 0.2 percent. January
> consumer prices rose 0.6 percent, double the expectations at the time (The
> Wall Street Journal, page A2).
>
> "Each layoff in today's headlines represents an earthquake in the lives of
> those Americans who have just lost their jobs. Who else is apt to suffer
> in the 2001 downturn? The worst news on layoffs lies ahead," contends
> Lester C Thurow, a professor of economics and former dean of the
> Massachusetts Institute of Technology's Sloan School of Management (USA
> Today, page 15A). In more impersonal terms, unemployment is what
> economists call a lagging indicator. If the gross domestic product goes
> down, unemployment will rise, but it takes a few months. Officially,
> unemployment numbers are up only slightly; in fact, the latest numbers
> show that the U.S. unemployment rate held steady at 4.2 percent during
> February. The big increases lie ahead of us. There is a lag time because
> firms delay layoffs to see whether the downturn is real and long
> lasting.... Anyone involuntarily laid off over the age of 55 is going to
> find it difficult to find re-employment. Firms don't want to incur the
> higher pension and health-care costs that go with older workers, and they
> would prefer to train people that potentially could be with them for
> longer periods of time. Very few older workers are going to find new jobs
> as good as those they lost. For most, their careers have come to an end.
> They will finish out their working lifetime in a series of dead-end jobs.
> Those under 55 will find it easier to find re-employment, but they are
> also likely to be re-employed at lower wage rates. Unless one is a
> professional worker, getting a job with a new employer means going to the
> bottom of the seniority list. For those laid-off in manufacturing,
> re-employment is apt to occur in the service sector, and on average,
> service jobs pay one-third less than manufacturing jobs. All of these
> factors lead to lower wages. Young, professional workers have the best
> chance of being re-employed at equal or higher wages, but even they face a
> big problem. Potential employers may know that they have been laid off
> because of a general market turndown, but there is always the suspicion
> that they were among the firm's worst employees at their skill level.
> Behind each percentage point rise in unemployment there are 1.4 million
> people who can tell stories about how the 2001 slowdown hurt them. Charts
> show an estimated 728,082 Americans lost jobs in "mass layoffs" affecting
> 50 workers or more during the three months ending January 31 (shown by
> industry). The number of "permanent job losers" is well below previous
> levels according to a chart showing the number of Americans who were laid
> off and looking for work in February of each year from 1994 to 2001.
> Source of the data for these two charts is given as the Bureau of Labor
> Statistics.
>
> Initial unemployment-insurance claimants after mass layoffs through the
> year 2000 and the first month of 2001, by month, are charted in a Time
> Magazine article (March 26) on the economic downturn in the United States.
> Source of the chart data is given as the Bureau of Labor Statistics.
> http://www.time.com/time/magazine/article/O,9171,102970,00.html)
>
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