Weak Jobs Report for Nation Likely Spells Trouble for Pennsylvania

HARRISBURG, PA (Jan. 9, 2009) -- This morning the federal government reported that the national economy shed more than a half million jobs and that the unemployment rate rose to 7.2 percent. In response, the Keystone Research Center in Harrisburg has issued the following statement from Labor Economist Mark Price:

"Although the Pennsylvania economy did not entirely escape the early effects of this recession, the commonwealth has fared better than many parts of the country. That situation changed in November when the Pennsylvania economy shed 26,000 jobs as the national economy lost over half a million jobs.

"The Bureau of Labor Statistics reports this morning that national payrolls shrunk again in December by more than a half million jobs. The Pennsylvania share of December's job losses will not be known until the end of January, but all signs point to another round of job losses in the commonwealth. Pennsylvania's continued claims for unemployment insurance in December stood 52 percent higher than during the same month last year. In a mild recession, the unemployment rate in Pennsylvania would likely peak in 2010 at 6.7 percent; the Pennsylvania unemployment rate this November was already at 6.1 percent.

"There is a clear and urgent need for a federal fiscal stimulus package to blunt the rise in unemployment in Pennsylvania. While President-elect Barack Obama has promised to deliver quickly a large stimulus, more than a third of the spending being discussed could be for tax cuts. This may not give the economy the full boost it needs at this time. Given the size of the federal deficit, it is critical that every dollar of government stimulus is quickly injected into the economy to buy goods and services. But businesses and consumers, concerned about the state of the economy, are likely to save rather than spend their tax cuts, thus defeating the intent of the economic stimulus package. More of the fiscal stimulus package needs to be devoted to measures like aid to state and local governments, infrastructure spending, and assistance to those who have lost their jobs as a result of this deepening recession."

The Keystone Research Center is a nonprofit, nonpartisan organization seeking to promote a more prosperous and equitable Pennsylvania economy.