Worried Americans cut spending as jobs disappear

Fri Jan 9, 2009 10:01pm

By Andrea Hopkins

CINCINNATI (Reuters) - Americans, already anxious about losing their jobs, faced Friday's news of deepening unemployment with grim resignation and vowed to cut their spending further, update their resumes and brace for survival in what many expect will be a long, painful recession.

A government report showing U.S. employers cut more than half a million jobs in December and the jobless rate climbed to its highest point in nearly 16 years seemed to surprise few Americans interviewed in cities across the country.

"I'm very worried about my job," said Ellen Whittington, 32, who works for a German automotive company in Cincinnati.

"I've gotten back on (online career site) Monster to update my resume and I'm trying to network with people I know," said Whittington, who hopes her 10 years in the fast deteriorating auto sector will translate to another field.

But, like many, she's preparing for a long recession.

"I think it's going to get a little bit worse before it gets better, maybe another two to four years," she guessed.

In Chicago, 29-year-old Matthew Lane was discouraged by a his futile six-month search for full-time work.

"I have two part-time jobs that I really enjoy that don't pay a whole lot but pay enough to keep me afloat," said Lane, who works at the Chicago Children's Museum and teaches music.

"Finding full-time employment would be ideal ... I'm certainly trying, but it's been unsuccessful for a while now."

The U.S. jobless rate rose to 7.2 percent in December as employers cut 524,000 jobs, the Labor Department said.

Economists said the unemployment rate -- the highest since 1993 -- would have been even worse if not for thousands of Americans who have simply given up looking for work. Nearly two million jobs have been lost in the last four months.

"We're seeing a complete unraveling of the labor market and are on track for getting beyond 10 percent unemployment," said Lawrence Mishel, president of the Washington-based Economic Policy Institute.

DIRE PREDICTIONS

Ordinary Americans are also offering dire predictions for the unemployment rate.

"I do think it will go over double digits," said 43-year-old Tracy Miller of Overland Park, Kansas, who lost her job nearly a year ago packaging home loans for a Kansas City mortgage company. Continued...

Like many consumers, she and her husband have cut their spending. In November, they started using only cash to pay for purchases and they both fear it will take a long time for the economy to recover.

"I'm nervous. I think too many people have on rose-colored glasses," said Miller. "This could get a lot worse."

Sharp cutbacks in consumer spending, which usually accounts for two-thirds of U.S. economic activity, will prolong America's recession, now dragging into its second year. But for people like Janice Brogdon, who has lost two jobs in the last four months, slashing expenses is the only way to survive.

"It is amazing how much longer you can make your money last when you know you have little to none coming in," said Brogdon, a 49-year-old technical trainer in Maryland.

"Now I will be much more conscious on how I spend money. And I have to be able to put money away so that, God forbid, if I find myself in that situation again, it will be easier," said Brogdon, who starts a new job in Washington D.C. on Monday.

Spending cutbacks aren't the only way Americans are girding for the deepening recession.

Normand Monastesse, a retired pilot who lives in a Dallas suburb, told Reuters in the driveway of his home in a gated street that the numbers were "alarming" and made him concerned that crime would rise along with unemployment.

"I've actually bought extra ammunition for my guns for home protection," he said. "I saw the (job) numbers this morning and I'm alarmed and I'm also alarmed for the people affected."

President-elect Barack Obama said the unemployment report offered a "stark reminder" of the need to move quickly to pass a bold economic stimulus package.

The December jobs report is the last to be issued under Republican President George W. Bush. When he took office 2000, the jobless rate was 4.0 percent, near a record low.

Some of those interviewed hope the inauguration of Democrat Obama on January 20 will help ease the economic malaise.

"I'm pretty excited about a change in government, hopefully the economy will start making progress," said Cincinnati account manager Melissa Close, 29, a former Bush supporter. But she said Americans themselves caused the recession.

"I think we as Americans have made some really dumb decisions. When you look at the credit cards and mortgages, the lifestyle where we have to have it 'now' -- we have ourselves to blame," she said.

http://www.reuters.com/article/domestic ... nnel=10112