Nearly ¼ Million Jobs Lost in October.  The fallout from the credit crisis has intensified in the past three months with the U.S. economy shedding 240,000 jobs in October, according to the most recent report from the Bureau of Labor Statistics. The unemployment rate has increased to 6.5 percent – its highest level since 1994.  Declining employment has been exacerbated by higher prices, particularly for food and energy, resulting in a sharp drop in real wages.   Nominal average weekly earnings were only 2.9 percent higher than they were in October 2007, while the Consumer Price Index has risen about 5 percent over that time.    As a result, more families are struggling to make ends meet, which is likely to negatively impact consumer spending, and thus result in further job losses down the line.  With these dire economic circumstances, the debate has moved beyond whether the economy is in recession and onto the question of how the government can step in to provide relief for struggling families and to break the vicious cycle of job losses and diminished household spending.

Low Motor Vehicle Sales Spell Trouble for Domestic Auto Industry, Broader Economy.  American automakers, along with the U.S. Department of Commerce, reported that sales for domestically-manufactured cars and trucks fell further in October.  Automobile sales were 27 percent below last October’s figures and light truck sales were down 40 percent.  The troubles at Detroit’s Big Three automakers, which have resulted in large losses and job cuts, are large enough to affect measured GDP.  Industry losses subtracted 0.64 percent from GDP growth in the 2nd quarter and another 0.80 percent from growth in the 3rd quarter.   Because auto producers and suppliers provide a large fraction of manufacturing jobs disbursed throughout a number of states, additional declines in Big Three output are likely to be widely felt.

Pending Home Sales Fall by 4.6 Percent.  The National Association of Realtors (NAR) reported that the index for pending home sales fell by 4.6 percent in September.  The index currently stands at 89.2 where a value of 100 would be equivalent to the average level of sales in 2001, when the NAR first began reporting the data.  The low level of sales suggests that troubles persist in the housing market as well as the broader economy, reflecting other housing indicators along with news on low consumer confidence and significantly weakened purchasing power.

Productivity Growth Slows in the 3rd Quarter.  The U.S. Department of Labor reported that nonfarm business productivity growth in the 3rd quarter slowed to 1.1 percent, down from 3.6 percent in the prior quarter.  Productivity is measured as the output per hour of all persons.  During the 3rd quarter nonfarm output fell by 1.7 percent, while total hours worked fell a larger 2.7 percent.