August 7th, 2009
11:50 AM ET

Financial Dispatch: Unemployment rate drops

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Andrew Torgan
CNN Financial News Producer

The battered U.S. job market is showing signs of improvement.

Employers scaled back sharply on layoffs in July, cutting 247,000 jobs. That’s the fewest in nearly a year. The unemployment rate, meanwhile, dipped to 9.4% - its first decline in 15 months.

The numbers suggest a turning point is at hand after job cuts earlier in the year that totaled as much as 700,000. The economy has lost 6.7 million jobs since the recession started in December 2007.

But there was still plenty of bad news to be found.

The number of people unemployed for more than six months continued to rise, reaching nearly 5 million people - a record high. And the average amount of time that an unemployed person has been out of work reached 25.1 weeks, the highest reading in the 61 years that the Labor Department has been keeping records.

‘Clunkers’ gets a lifeline

The Senate voted to pass a $2 billion extension of the popular “Cash for Clunkers” program Thursday evening, as lawmakers rushed to finish business before their August recess.

The House had already voted to extend the program, which blew through its $1 billion in initial funding, before it adjourned for the summer last Friday. President Obama is expected to sign the extension into law later this week.

Under the Clunkers program as enacted, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less.

According to government figures, compact cars and hybrids have been the top sellers so far.

The top-selling car had been the Ford Focus, but new figures released Wednesday show that the Toyota Corolla captured the top spot.

‘Clunkers’ controversy

Despite the exclusion of large trucks in the government's top-ten “Clunkers” sales list, an independent analysis of sales figures shows two full-size trucks were actually among the top-ten buys. Furthermore, a small crossover SUV, and not a compact car, was the most popular overall.

Analysis by automotive Website Edmunds.com disputes the government's results, which show small cars as the top choice for shoppers looking for “Clunker” deals.

For example, the Ford Escape crossover SUV, instead of being the seventh-most popular vehicle under the program, as the government ranked it, was actually the best seller according to Edmunds.com.

The discrepancy is a result of the methods used. Edmunds.com uses traditional sales measurements, tallying sales by make and model. The government uses a more arcane measurement method that subdivides models according to engine and transmission types, counting them as separate models.

AIG turns a profit

Bailed-out insurance giant AIG reported its first quarterly profit in nearly two years, citing stabilization in its insurance businesses.

The company said its second-quarter net income was $1.8 billion, after six straight losing quarters. A year ago, it lost $5.4 billion.

The last time AIG reported a profit was in the third quarter of 2007, when it earned $3.1 billion. AIG lost $99 billion last year and $4.4 billion in the first quarter of 2009.

And it’s not out of the woods just yet… the company owes U.S. taxpayers $87.6 billion, which it plans to pay down by selling off non-core assets and stakes in three huge subsidiaries.

Fannie Mae asks for another $10 billion

Fannie Mae, the government-controlled mortgage insurer, said Thursday that it needs another $10.7 billion from the Treasury Department to stay afloat.

The new infusion means the troubled company has drawn a total of $45.9 billion of its $200 billion lifeline this year.

Fannie Mae and its sister firm, Freddie Mac, were taken over by the federal government last September amid the global financial meltdown.

Follow the money… on Twitter: @AndrewTorganCNN

Filed under: AIG • Andrew Torgan • Economy • Finance • Unemployment
soundoff (7 Responses)
  1. earle,florida

    The "Cash-for-Clunkers-Program" helps all american, and foreign car makers manufacturers in the US,other than the Toyota Prius, which is made (hasn't impacted % wise US Car Sales) exclusively in Japan. Regarding,Fannie Mae,give-em the dough, and let them facillitate the ailing mortgage market,period! What really concerns me is the "Tarp" funds. The money's left,and monies being paid back,(put back in the kitty) will be wasted on the "Commercial Mortgage Backed Securities"(CMBS's) debacle once rates are reset later this year, with estimated defaults are at $35-$45Bn./per year,for the next five years.As you can tell,and see, my concerns are for the working families,and homeowners struggling to stay out of forecloser ,which by the way have gotten absolutely no help from the original "TARP", other than to bail out the big-boy's. It's time to head congress off at the pass,and demand that the TARP funds be allocated to "Bailing-out-the-Homeowners",before they slip one (congress,and their Ilky beauraucracy) by us again,and bail out the commercial banks,who by the way haven't been producing many jobs,...? Food for thought,bona-petite,... PS Job #'s absolutely great,but let's not get carried away,and have a relaspe,keep using the mattress as your safe-refuge for your hard earned cash.(It even firms up my mattress for a better nights sleep,amazing)

    August 7, 2009 at 3:34 pm |
  2. Cheryl Marty

    August 7th, 2009 12:01 pm ET

    I have wondered and waited for all of the reporters and economic think tanks to put this out and no one has.. so..
    Why are we not pulling together and going back to the BUY American? If the trickle down effect has put so many of us out of work and brought so many companies to thier knees cant the trickle up effect also work ?
    For months now if it does not say Made In USA I do not buy it, that includes canned fruit, yes you heard me right the canned fruit you buy in the grocery is Not from our farmers, this is not a Walmart bash but I don’t shop there much anymore... it is so hard to find USA products

    I have learned if I cant find it USA made I don’t need it for the most part , ganted there are somethings that I have to have like car parts, I request USA and have to pick from China or Mexico and I drive an american made car ! so PLEASE I would like american made parts !

    If we all stick to this for even 6 months It has to bring back supply and demand which means more Americans will return to work be paying taxes and this should start to bring the huge spending under control,

    If we bring less into our country, then we will have to produce it, more jobs better income homes can be paid for, cars bought and life as it should be starts to return.

    I fear for my kids, we can’t afford collage now, most of our 401 is gone and there aren’t any jobs.
    to help this along there should be an internet site that american companies can sign up at and list the product they carry and who or what stores sells them so we can easily find them and buy more American Goods
    Go Red white & blue

    August 7, 2009 at 3:20 pm |
  3. Deborah/Kansas City

    One of the reasons the media got such poor grades? Yesterday all anyone could talk about was how the unemployment rate was going to be a 10% or higher and what a failure that made President Obama. Now, that the rate actually lowered, and there are obvious signs that the President's plans are starting to work, nada, nothing, no apologies, or gee we were wrong, the President is doing great. Also, you obviously had the report card done before this report came out, worried that it would help the President's grade? He still did better than you, congress, senate, just about everyone, except Hillary.

    August 7, 2009 at 2:06 pm |
  4. JC- Los Angeles

    How on earth can anyone decipher that the recession is coming to an end when Fannie needs $10 billion; the term clunker is routinely applied to America; AIG lost $4.4 billion in the first quarter; and 247,000 people were given the Shanghai salute in July?

    You can't make this stuff up.

    August 7, 2009 at 1:17 pm |
  5. Michael C. McHugh

    We've known since World War II that it's possible to stimulate an economy out of a depression this way, although the Republicans have forgotten about that–for obvious reasons.

    Of course, if there's another big shock to the system down the road, there will be another crash, and this time there will be no more money left for bailouts. Perhaps there shouldn't be.

    Obama is going to be in the same position as FDR, who once said that the capitalist is like the man you save from drowning who turns on you and complaints that you didn't save his hat.

    August 7, 2009 at 12:36 pm |
  6. Mike, Syracuse, NY

    I heard a report that 4 out of 5 cars bought under this plan were foreign becuase there was no Buy american provision in the bill. If true that's obscene given the state of health of the US car industry. How can our tax dollars be used to supplement foreign cars makers. CNN report on this!

    August 7, 2009 at 12:24 pm |
  7. GF, Los Angeles

    There are jobs out there but the problem that no one has addressed is how low the pay is for these jobs. $10 – $12 an hour does not cut it here in CA. That's poverty level for a family yet the jobs require college educated skills. Companies are expecting more but want to pay less. In the end it will harm these companies because underpaid workers do not have the money to spend and stimulate the economy if they're barely making it as is.

    August 7, 2009 at 12:12 pm |

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