Government layoffs are responsible for increased joblessness in September. A total of 159,000 government jobs were cut in September, 76,000 of which were local government layoffs, with teachers high on the cut list.
This makes the largest local government employee cull in nearly 28 years. On top of this, temporary census jobs numbering 77,000, ended while state government released 7,000 employees.
The employee cuts are reflections of the heavy toll the economic recession is taking on government budgets. As most local as well as state governments are required to balance their budgets, as income, such as from property taxes falls, they must cut jobs to compensate.
While President Obama stressed the good news of private sector gains in employment rates, he conceded that private gains had been tempered by the large losses in the public sector.
“We have to do everything we can to accelerate this recovery. Yes, the trend line is moving in the right direction, but I’m not interested in trend lines, just the hardworking Americans behind them.” Obama said at a press event in Bladensburg, Md.
If weak job growth continues, the Federal Reserve is likely to have to intervene in the economy, with most analysts expecting government debt to be bought up by the central bank to try and lower the interest rate and increase borrowing.
There is the possibility the Fed might wait until December to utilize further monetary easing policies, in the hope that the economy may naturally improve heading into 2011.
