Economic Outlook: The stimulus debate

NEW YORK, Aug. 7 (UPI) -- Asian and European markets wobbled following losses on Wall Street Thursday in advance of a critical U.S. jobs report Friday.

Economists expected a loss of 325,000 jobs in the past month in a report that will shed further light on the impact of the economic recovery act on the job market.

Automatic Data Processing, which issues a private assessment of job losses, said Wednesday that 371,000 non-farm jobs were lost in the month, sharply lower than an average loss of 498,000 per month for the past three months. A month ago, the Labor Department, which economist say produces a more accurate figure, said the losses stood at 476,000.

Any figure will give politicians a moment in front of microphones. White House officials, including Vice President Joseph Bidden and chief economic adviser Christina Romer declared this week that the $787 billion stimulus plan is working. Biden declared it so flanked by economic advisers Tuesday. Romer said Thursday the spending plan had lifted the gross domestic product two percentage points in the second quarter, The New York Times reported Friday.

She also said, "government spending has to satisfy genuine needs and leave us with useful public investments."

That may mean long-lasting bridges and telecommunication infrastructure to some, but the shorter view in newsrooms and living rooms is one word: Jobs. Should the 300,000 plus job losses push the July unemployment rate much higher than the current 9.5 percent, Republicans will have a day of "I-told-you-so." If the unemployment rate stalls, Republicans and Democrats, during the August recess, can go play golf.

In Europe, the Bank of England and the European Central Bank elected to maintain their bank-to-bank lending at current rates, 0.5 percent and 1 percent respectively, amid broad signs of economic improvement.

Home prices have risen in Britain and a decline in manufacturing there has slowed. Inflation globally has been nudged upward due to rising oil prices, but inflation still holds below most central banks' target rate of 2 percent. In Spain, where unemployment has reached 18.1 percent, the decline in jobs has eased somewhat.

In Asia, the Nikkei 225 average gained 0.23 percent, while the Hang Seng index in Hong Kong dropped sharply, off 2.51 percent. The Singapore Straits Times fell 2 percent, while the S&P/ASX in Australia slid 0.62 percent

In midday trading in Europe, the FTSE 100 in Britain lost 1.1 percent, while the DAX 30 in Frankfurt fell 0.65 percent. The CAC 40 in France lost 0.88 percent, while the pan-European DJStoxx 600 slipped 1.05 percent.