The worst national unemployment numbers in years are casting a shadow over Silicon Valley, whose tech sector has been viewed as relatively protected against a downturn but now seems certain to be engulfed by it.
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National unemployment jumped to 7.6 percent of the work force in January, up from 7.2 percent in December, the U.S. Department of Labor reported Friday. That's the highest level in 16 years, with a growing recession claiming nearly 600,000 jobs in January on the heels of 577,000 jobs lost in December.
There's no escape for Silicon Valley, which has been insulated by a strong export sector that is fading as other countries are hit by the downturn and U.S. demand for technology products continues to weaken.
Economists are predicting valley layoffs throughout 2009, and they are looking to President Barack Obama's stimulus package as a high-tech lifeline for the region.
'Further declines'
"Unfortunately, the worst is yet to come," said Sung Won Sohn, economics professor at California State University-Channel Islands, noting that the valley "should brace for further declines" in the tech sector.
Wells Fargo senior economist Scott Anderson said he expects "more layoffs and cost-cutting at technology firms in Silicon Valley throughout the year" as businesses cut back on technology spending. A decline in Asian economies will also slow demand for the valley's products, he said.
"Asia is going to get hit a lot harder than was imagined a couple months ago," Anderson said. Japan is in a deep recession and facing a 2009 decline in output worse than expected in the U.S., he said.
The valley's December unemployment rate was 7.8 percent, and that could rise again when the local numbers are released for January in two weeks.
Intel, Cisco Systems, Adobe Systems, Sun Microsystems and SanDisk, among others, have announced major job cuts in recent months.
California's jobless rate has risen in a year to 9.3 percent in December, from 5.9 percent in December 2007. The state's unemployment rate is higher than the nation's because its working-age population grows faster than the supply of available jobs, partly because of immigration.
The sobering national numbers elicited a chorus of "worsts" from labor market observers. Overall, payrolls shrank in January by 598,000. Retailers eliminated 45,000 jobs following the worst holiday shopping season in memory. The manufacturing sector shed 207,000 jobs, while construction lost 111,000.
Last week, a record 626,000 people filed new unemployment claims, a 26-year high.
The drop in payrolls was the biggest one-month decline since 1974, and the first time in memory that the number of jobs lost topped 500,000 for three months in a row.
The nation has now lost 3.6 million jobs during this recession, which began in December 2007. Sohn noted that the job loss has eliminated $360 billion in buying power from the economy.
About 11.6 million people are now unemployed. In January, the unemployment rate was 7.6 percent for men, 6.2 percent for women, 6.9 percent for whites, 12.6 percent for blacks and 9.7 percent for Hispanics.
The one bright spot on the horizon is the stimulus package being debated in Congress. It should provide a boost to the valley, economists said, with its proposed spending on digitizing hospital records, developing clean energy and other activities requiring the tech industry's software and hardware.
"In this day and age, you can't do anything from building roads to supporting heart institutes without more technology," Sonh said. It should be a buffer against businesses' tendency to curb technology spending during recession, he said.
Stocks gain
Despite the job losses, Wall Street's major indexes were up Friday. The Dow Jones industrial average gained 2.7 percent to close at 8,280.59; the tech-heavy Nasdaq composite index rose 2.9 percent to 1,591.71; and the Standard & Poor's 500 index closed at 868.60, up 2.7 percent.
Friday afternoon, Obama called the delay in passing a stimulus package "inexcusable" in remarks at the White House. Agreement was apparently reached late Friday in the Senate on a $780 billion package of spending plans and tax cuts intended to create jobs and spur economic growth. The legislation will need to be reconciled with a House version before Obama can sign it.
Stephen Levy of the Center for Continuing Study of the California Economy said that while the valley is "in the middle of it now," it should be one of the first regions to emerge from the recession. "We didn't lead this recession like we did in 2000," Levy said. "We got dragged kicking and screaming into it."
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BY Pete Carey
Source：Mercury News
Copyright © 2009 - San Jose Mercury News
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1 comments:
Of the money we have seen thrown around thus far let me ask you this, that 168 billion that our country borrowed to give away to us in the form of an "economic stimulus package" ...did it do a darn thing to create jobs or stimulate our economy? NO, nothing. And we borrowed the money from China.
This past year the high cost of gas nearly destroyed our economy and society. More people lost jobs and homes as a direct result of that than any other factor in our history.
Fannie and Freddie continue to get all the blame. Of all the homes I have seen lost in my area SW FL and believe me I have seen many, none were due to an adjustable mortgage. They were due to lack of work.
Families went broke at the pump alone. Then added to that most saw record rate hikes at their utility companies. The high cost of fuel resulted in higher production and shipping costs that were passed on to the consumer, in most cases higher prices for smaller packaging.
Consumers tightened their belts, cut back, went out to eat less or stopped totally. Drove around on tires that needed replacing longer, some even quit buying medicines they really need.Unfortunately cutting back and spending less results in even more layoffs. A real economical catch-22.
And, as we are doing the happy dance around the lower prices at the pumps OPEC is planning to cut production to raise prices. They are even getting Russia in on the cutbacks. Oil is finite. We have used up the easy to get to reserves already. It will run out one day.
We have so much available to us. Solar and Wind are free sources of energy. Of course to get the harnessing process set up is somewhat costly it is still free energy.
It would cost the equivalent of 60 cents per gallon to charge and drive an electric car. The electricity to charge the car could be generated by solar or wind at least in part and in most cases totally.
If all gasoline cars, trucks, and suv’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. What a powerful resources we have neglected.
Jeff Wilson has a profound new book out called The Manhattan Project of 2009 Energy Independence Now. http://www.themanhattanprojectof2009.com Powerful, powerful book! I think we need to rethink all these bailouts and stimulus packages. We need to use some of these billions to bail America out of it's dependence on foreign oil. Create clean cheap energy, create millions of badly needed new green collar jobs and get out from under the grip foreign oil has on us. What a win -win situation that would be for America at large!
http://www.themanhattanprojectof2009.com
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