Surprisingly high unemployment numbers mean recovery could be a long way away.

A summary of what's in the major U.S. newspapers.
July 3 2009 6:51 AM

Jobless Rate Crushes Recovery Dreams

The Washington Postand New York Timeslead with, while the Wall Street Journalbanners, the unexpectedly grim unemployment numbers released yesterday. While the rate increased only slightly to a 26-year high of 9.5 percent, from 9.4 percent, the raw numbers led many to warn that economic recovery isn't on the horizon. The U.S. economy lost 467,000 jobs in June, marking the first time the monthly losses increased after they had been steadily shrinking from the January peak of 741,000. "There's nothing in here to show that the economy and the market are pulling out of the grip of recession," an economist tells the NYT. Stock markets around the world decreased, with the Dow Jones industrial average dropping 2.6 percent.

The Los Angeles Timesoff-leads the unemployment numbers and leads with news that California's controller began printing IOUs. It marked the second time since the Great Depression that the state had to resort to such an unusual action to meet its obligations. The controller decided to state the obvious and said the IOUs "are a sign that the state is being fiscally mismanaged." Most of the IOUs are going to go taxpayers who are still owed income tax refunds, but many others, including businesses and pensioners, will also be getting the check-like pieces of paper that have the words "registered warrant" emblazoned on them. Some banks say they will accept the IOUs, at least for the next few days. The NYT off-leads the move and says it "was seen as a warning flag to other states."

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In addition to the basic unemployment rate, everyone points to worrying signs from the so-called underemployment rate, which includes part-time workers who can't find full-time work and those who have given up looking, that has increased to 16.5 percent. Until yesterday, there was much optimism that the economy was in recovery mode, but the new numbers put an end to all the happy talk. For the economy to expand in the second half of the year, as many had been predicting, there needs to be a boost in consumer spending, and that may be a pipe dream as employment worries are pushing people to save. The WP points out that the United States now has the same number of jobs as in 2000, "meaning that nine years of employment gains have disappeared." Inside, the WSJ points to the fact that wages remained pretty much stagnant as another worrying sign. Average hourly earnings increased a mere three cents between April and June, "the smallest quarterly gain since at least 1964," notes the paper.

The NYT notes that many are pressuring the Obama administration to push through another round of government spending, particularly since the unemployment rate is now higher than what the administration projected at the beginning of the year and everyone expects it to continue increasing. The White House says there's enough money scheduled to hit the economy but also acknowledged that it is getting there quite slowly. Not everyone was ready to join in the doom-and-gloom talk yesterday, saying that people had simply gotten too optimistic too quickly. "The economy is in the process of bottoming, but that's different from saying it's recovering," one expert tells the WP.

The NYT's Paul Krugman says the jobs report is proof that "[w]e're going to need a bigger stimulus." Krugman writes that, right now, the situation looks "depressingly familiar to anyone who has studied economic policy in the 1930s" because we have a Democratic president who pushes through recovery measures that aren't quite bold enough to "produce a full recovery." Getting another stimulus package through will undoubtedly be difficult, but it's essential.

The WP and WSJ both front looks at the government's efforts to protect its computer networks from attack but from slightly different angles. The WP gives priority to word that the White House is moving forward with a plan by the previous administration to enlist the National Security Agency's help with a system that would screen "government computer traffic on private-sector networks." Even though Department of Homeland Security officials insist that the screening will involve only data going to or from government systems, the program has still sparked a debate in the administration about privacy. "Each time a private citizen visited a 'dot-gov' Web site or sent an e-mail to a civilian government employee, that action would be screened for potential harm to the network," explains the WP. The WSJ doesn't highlight the NSA's involvement but instead focuses on how long it has taken to secure government computers and, overall, does a much better job of clearly explaining what on earth this system, known as Einstein, is all about.

The pilot program for Einstein 3 was due to get started in February at Homeland Security with the help of AT&T. But after the telecommunications company was sued for participating in Bush's warrantless-wiretapping program, it demanded written assurance from the Justice Department that it would bear no legal liability for participating in the program. Meanwhile, the government will still take 18 months to completely install the previous version of the system, Einstein 2, across most of the government. But that system leaves a lot to be desired, since it doesn't actually protect against attacks and merely takes notice when something has already happened. Michael Chertoff, the former homeland security secretary, likened it to the difference between "a cop with a radar gun on a highway who catches you speeding or drunk and phones ahead to somebody at the other end" and a "a cop who actually arrests you and pulls you off the road when he sees you driving drunk."

Nearly 4,000 U.S. troops continued their push into southern Afghanistan yesterday, and the WP has the most detailed, on-the-ground information about how the operation is going. So far, so good. Although one Marine was killed yesterday, overall the troops encountered little resistance as they trudged along in 110-degree weather. Several became sick from heatstroke, and five had to be evacuated for medical assistance. Commanders are very purposefully trying to keep the gunfire from U.S. troops at a minimum to focus on meeting with town elders along the way to gain their trust. U.S. officials are convinced that if Afghans are given security and basic services, they will stop supporting the Taliban. But the NYT isn't so sure and says that in certain areas, Taliban control is so extensive that "winning districts back will involve tough fighting and may ignite further tensions." Many villagers interviewed by the paper said they'd prefer to be under Taliban rule rather than take their chances with American troops.

Elsewhere in Afghanistan, military officials believe a U.S. soldier who went missing near the Pakistani border is believed to have been captured by Taliban militants. The whole situation is rather murky, but officials say it doesn't look like the Taliban captured him in the base but rather that the solider left for some reason "and got into trouble," as one official put it. The WP reports that a member of the Taliban said the soldier is in the custody of insurgents on the Afghan side of the border. The LAT points out that the "soldier could provide insurgents with both a propaganda bonanza and a bargaining chip."

The NYT takes a front-page look at how the notice sent to American Apparel this week informing the company that almost 2,000 of its employees appear to be illegal immigrants exemplifies how the enforcement of immigration laws is changing. The Bush administration had become fond of workplace raids and rounding up allegedly illegal employees. But now, immigration authorities want to focus more on employers and use fines and civil sanctions, rather than criminal charges, to punish wrongdoers.

The Jackson family announced yesterday there will be a public memorial service for Michael Jackson on Tuesday at the Staples Center in downtown Los Angeles. The space can hold 20,000 people, and there will be 11,000 free tickets available to the public. Details will be released today on how people can register for tickets. The LAT notes it's not clear who will pay for the "massive law enforcement deployment necessary" for what everyone expects will be a huge event.

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