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                                                                               CBPP STATEMENT
                                                                               Friday, August 1, 2008

                                                                               Contact:
                                                                               Shannon Spillane, 202-408-1080, spillane@cbpp.org


820 First Street, NE                             STATEMENT BY CHAD STONE, CHIEF ECONOMIST,
Suite 510
Washington, DC 20002                                  ON THE JULY EMPLOYMENT REPORT
Tel: 202-408-1080
Fax: 202-408-1056                Today's disappointing employment report lends greater urgency to lawmakers' efforts to craft a
                                 second round of effective economic stimulus legislation that Congress can enact quickly when it
center@cbpp.org
www.cbpp.org                     returns in September. Consumer spending supported by the stimulus payments that Congress
________________________         enacted earlier this year has kept the economy from being even weaker than it is. But those
Robert Greenstein                effects won't last, and nothing in the latest data suggests the economy is on the verge of a
Executive Director               spontaneous rebound.
Iris J. Lav
Deputy Director
________________________         July was the seventh straight month of job declines, with employers shedding a cumulative
                                 463,000 jobs so far this year. The official unemployment rate rose to 5.7 percent in July, but
Board of Directors
                                 other indicators show even greater labor market weakness. For example, the Labor Department's
David de Ferranti, Chair         most comprehensive alternative unemployment rate measure -- which includes people who want
The World Bank
                                 to work but are discouraged from looking and people working part time because they can't find
Henry J. Aaron                   full-time jobs -- stood at 10.3 percent in July. In addition, roughly 1 in every 5 of the 8.8 million
Brookings Institution
                                 unemployed has not been able to find a job despite looking for 27 weeks or more.
Ken Apfel
University of Maryland
                                 Most forecasters expect the unemployment rate to keep rising toward 6 percent in the second half
Barbara B. Blum                  of the year because they do not see underlying strength in an economy that continues to fight the
Columbia University
                                 headwinds of high food and energy prices, ongoing housing market woes, and credit market
Marian Wright Edelman
Children's Defense Fund          jitters. The economy expanded at a smaller-than-expected 1.9 percent pace in the second quarter,
                                 but most analysts believe that things would have been significantly worse without the boost to
James O. Gibson
Center for the Study of Social   consumption from the stimulus payments. Previous growth estimates were also revised down, to
Policy                           0.9 percent growth in the first quarter and a contraction of 0.2 percent in the fourth quarter of 2007.
Beatrix Hamburg, M.D.
Cornell Medical College          While the enacted stimulus payments will continue to provide support for the economy in the
Frank Mankiewicz                 current quarter, their effect will wear off by the end of the year. The weak growth that is forecast
Hill and Knowlton                for the rest of 2008 and into 2009 suggests that an economic package providing a well-targeted
Richard P. Nathan                second round of fiscal stimulus would benefit the economy, as well as state governments and
Nelson A Rockefeller Institute   those individuals who are feeling the effects of the weak economy the most. Such a package
of Government
                                 would be most effective if it focuses on providing assistance to those who are experiencing the
Marion Pines
Johns Hopkins University         greatest hardship and goes where it will be spent most quickly and thus have the largest stimulus
                                 impact.
Sol Price
Chairman, The Price Company
(Retired)                        A good place to start would be worthwhile measures that were left out of the first stimulus
Robert D. Reischauer             package. Those include a temporary increase in aid to state governments to help them avoid
Urban Institute                  budget cuts and tax increases and a temporary increase in food stamp benefits. These have a high
Audrey Rowe                      fiscal stimulus bang-for-the-buck because they would be spent quickly. An increase in low-
AR Consulting                    income home energy assistance (LIHEAP) would be well-timed to keep low-income households
Susan Sechler                    from cutting back on other purchases when facing high energy bills. Policymakers did enact an
German Marshall Fund             additional 13 weeks of unemployment insurance (UI) benefits recently for workers exhausting
Juan Sepulveda, Jr.              their regular benefits, but additional assistance to unemployed workers would be very effective
The Common Experience/
San Antonio                      stimulus as well. As with the first stimulus package, the three T's ­ timely, targeted, and
                                 temporary ­ should be the guiding principles in designing an effective package.
William Julius Wilson
Harvard University                                                                    ###
________________________         The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy
John Kramer                      institute that conducts research and analysis on a range of government policies and programs. It is
Founding Chair                   supported primarily by foundation grants.
1937-2006