Business Notes: Economy

The economic rebound that experts see unfolding this year no longer seems so certain. Two traditionally conflicting forces are conspiring to delay, perhaps sabotage, the now desperately sought recovery. Last week the Labor Department admitted that it had grossly undercounted the number of jobs lost in 1991. Initial estimates were that 782,000 payroll positions disappeared last year; now officials say the final tally may be almost double that, or 1.43 million. And the poor job outlook is spilling into the new year. The government said last week the unemployment rate remained stuck at a five-year high of 7.1% in January. Especially unsettling was the fact that an additional 91,000 jobs were lost last month, more than most economists had expected.

With the economy in such a moribund state, it is all the more puzzling to economists that interest rates have been creeping up in the past few weeks. The cost of a 30-year mortgage, for example, has jumped from 8.36% at the beginning of the year to 8.82% now. Economists are absolutely baffled by the recent rise in short- and long-term rates. "Whatever the reason," says David Resler, chief economist at Nomura Securities, "if the run-up in rates reflects an emerging trend, the economic recovery hoped for later this year will never develop."

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CREDIT: [TMFONT 1 d #666666 d {Source: U.S. Dept. of Labor Current Employment Survey}]CAPTION: Jobs lost in the U.S. in 1991