The Guardian September 12, 2001


US unemployment hits a four-year high

The US unemployment rate swelled to 4.9 per cent in August as job losses 
in manufacturing passed one million following the year-long national 
economic slowdown. The increase in the monthly jobless rate was the biggest 
in six years.

The US Federal Reserve Bank is expected to cut interest rates for the 
eighth time this year. However, the interest rate cuts have not resulted in 
a stimulus to the economy.

As in Australia, so in the US, the living standards of millions of workers 
have been forced down drying up the money in the pockets of consumers who 
are expected to buy back what has been produced.

Employers have no intention of increasing wages for workers  quite the 
reverse. Their capitalist answer to the crisis is to further reduce wages 
in an endeavour to force the working people to carry the consequences of 
the capitalist crisis.

The report of increased joblessness sent stocks tumbling on Wall Street. 
The Dow Jones industrial average closed down almost 235 points, coming 
within striking distance of its low for the year.

"Ugly is not a strong enough term to describe this report [on 
unemployment]", said Joel Naroff, president and chief economist of Naroff 
Economic Advisors. "It was brutal."

Virtually every major manufacturing industry has lost jobs, says the 
report. Since July 2000, manufacturing employment has plummeted by more 
than one million.

Just this week, Motorola announced it would cut 2000 more jobs. Insurance 
giant American International Group said it was cutting 1500, and as 
Hewlett-Packard and Compaq merged, the companies said they will be cutting 
15,000 jobs.

Employment in the service sector increased by 72,000 while health services 
added as extra 32,000 which offset some of the losses in manufacturing.

The US economy is teetering on the edge of a depression situation and this 
is pulling down European and Japanese economies with it.

The policy of interest rate cuts makes borrowing cheaper for investors but 
it does not put money into the pockets of consumers and that is what 
employers and governments are strongly opposed to doing.

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