No Credit, No Jobsby Tim Manni
Today’s headline economic news isn’t pretty: the nation’s unemployment rate jumped to 6.50% in October, a 14-year high, after the Labor Department reported that 240,000 jobs were lost last month. To quote from the Bureau of Labor Statics report,
October’s drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months.
Of last month’s terminated positions, 62,000 were in the retail and financial-services sector. Even more have been lost in preceding months. Much of that can be attributed to the ongoing credit crunch; as credit dried up in August and September, businesses let employees go at an accelerating pace. Without credit to help borrowers finance purchases, and with no ready cash available to meet payrolls, businesses which rely heavily on the ready availability of credit — car dealers are just one example — found themselves unable to arrange financing for their customers.