>> tom: america lost jobs in june. but the president says the economy is still on the right track. >> now make no mistake: we are headed in the right direction. but, as i was reminded on a trip to racine, wisconsin, earlier this week, we're not headed there fast enough for a lot of americans. >> susie: we hear from his top economic adviser, and other economists worried about the slow down in job growth. you're watching "nightly business report" for friday, july 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. the u.s. economy lost jobs in june, the first time that's happened this year. tom, today's employment report didn't give americans much to cheer about as they head off for the holiday weekend. >> tom: susie, 125,000 jobs were lost, mostly because thousands of temporary census bureau workers left their jobs the unemployment rate fell unexpectedly to 9.5%, down from 9.7%. but that's only because many

people stopped looking for work. >> susie: today's report reinforced worries that the economic recovery could be getting off track and the economy will slow over the next six months. scott gurvey has explains. >> reporter: if you were expecting today's report on employment in june to provide a clear picture of the outlook for the rest of the year you were disappointed. and if policymakers at the fed and in congress were looking to the report for guidance in the debate between additional stimulus and a new austerity they too were disappointed. the private sector did add jobs and more jobs than it added in may. and yes, the unemployment rate fell. but that was a result of a large number of people dropping out of the workforce. stock markets were unimpressed and economist bruce kasman says they had good reason. >> underneath the surface, what we see is modest private payroll creation in the month in june. a picture of though of a loss of real momentum in the economy as you've gone through the second

quarter. it's not weak. there are jobs being created. but i think that loss of momentum is raising some important questions about where we head next. >> reporter: traders do not like questions. the uncertainty weighs on the markets and on business. citigroup's steven wieting says, for example, employers may be more tentative about hiring because they're worried about the cost of health care under new laws. and he says, congress has left many other questions unanswered. >> how much will taxes go up? both for investors as well as incomes? that's going to have some impact on expectations which will dampen the economy this year. financial markets are not just passive forecasters of the future. they actually can dampen the real ability and the desire to borrow and spend. >> reporter: despite the pessimism most economists still see the economy growing in the months ahead. but few are predicting growth rates that are anything to cheer about. >> our projection is that it's most likely slow but steady. an economy that's growing at 3%. an economy that growing enough jobs to keep the unemployment rate drifting lower.

but i think there's more uncertainly here. there's more reason to be concerned. >> reporter: because of that concern market watchers are looking for stocks and bonds to remain in a trading range and to be more vulnerable to news events than usual. scott gurvey, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks end the week in the red, with the dow off 46 points. the nasdaq down nearly 10 points and the s&p 500 losing 4-3/4 points. volume dropped ahead of the long holiday weekend. 1.1 billion on the big board and 1.6 on nasdaq. that's over a billion fewer shares trading on the nasdaq compared to yesterday. adding to today's losses, the biggest drop in u.s. factory orders in 14 months. the commerce department says new orders for manufactured goods fell almost 1.5% in may on a big drop in transportation related orders. a california appellate court today sided with governor arnold schwarzenegger in his move to pay state workers minimum wage.

the governor slashed pay for 200,000 state workers yesterday, after lawmakers failed to close the state's $19 billion budget gap. and looks like there's a flaw in the iphone 4, after all. last week, apple said users getting dropped calls were holding the new phone wrong. today the company apologized, and said it was stunned to realize it was using the wrong formula to calculate the phone's signal strength. apple promised to fix the glitch. still ahead, help for the "buy now, pay later" generation: a game plan for gen y'ers looking to get out of debt. >> susie: back now to our top story: jobs. president obama says the economy is still headed in the right direction, it's just not creating jobs fast enough. to find out why that is, washington bureau chief darren gersh spoke with christina romer, chair of the president's council of economic advisers. darren began by asking romer why the number of private sector

jobs created in june fell below expectations. >> i think actually the private sector forecasts were a bit all over the place. i think the private sector job growth was just a tiny bit below expectations. what is true is we have been through a period of turbulence. the up roar over greece and what we've seen going on in europe. there has certainly been a lot of movement in world financial markets. i think particularly in that context, this report shows a certain stability, a certain sense that we are continuing in much the same trajectory we were on before. we have always said that trajectory needs to be a steeper upward line, and that's why the president keeps pushing for the measures he has before congress. >> but we've only got $83,000 jobs created in the private sector. many economists were hoping we would be well

over 100,000, and that would be disability for the people entering the job market. why rehabilitate we at that -- why aren't we at that level? >> i think we've known that the economy is facing head winds. that has always been the problem that we face, that this is not just an ordinary recovery. it is a recovery coming out of a financial crisis. it is a recovery coming out of a bubble and bust in our housing market. so you don't have the normal drivers of recovery. like a big boom in your construction sector because this is an unusual recovery. what is important is other sectors are filling in. we've seen manufacturing coming back stronger than you might have anticipated. we've seen strong export growth. we've seen a lot of growth in investments. we've seen firms are buying equipment and software, which is a vote of confidence in the economy. it is another source of demand. it's just different than what we've often seen. >> reporter: the administration critics are saying this shows that the stimulus really hasn't paid off. >> they are so wrong.

let me give you just another fact. in the first six months of 2009, we lost 3.7 million jobs in the private sector. in the first six months of this year, we added some 600,000 jobs in the private sector. that is an amazing turnaround. >> reporter: many economists and students of the labor market are very concerned that the great recession is going to accelerate the trend we've seen over the last number of years. to a kind of two-tiered economy with a lot of low wage jobs and high school jobs, and not many in the middle. i want to give you a chance to respond to that analysis. do you agree with it? >> we always see changes in our economy. i'd say most of what is going on now is just lingering effects of the recession, and when demand comes back, i think we will see people getting re-employed in much the same kind of distribution of skills that we had before. but what is true is the world does move on. and we are moving to a

more high-tech kind of economy, and that's why the president has emphasized job training, education. >> reporter: and finally, there are some 26 million people unemployed or underemployed. what advice would you give them when they look at this report and are worried about the job market. what advice would you give them how to get into the job market? >> the main thing i would say is hang in there. we're on the trajectory, and the jobs are slowly coming back. i worry about people giving up hope. i think there is reason for hope, and it's important that they do continue to search for work. i do also think coming back to your skills point, it is important -- you can take this time to improve your skills. we've done a lot of investments in community college. and there are funds for job training to make sure that you have the skills that employers are looking for. i think that's an important thing for their future and for the future of the economy. >> reporter: christina

romer, thank you for your time. >> it's great to be with you. >> susie: tom, this was a tough week for investors. the dow lost 460 points this week, and i don't think that we've seen a string of losses like this in a long, long time. >> tom: we haven't. it has been, in fact, sibs the fall of 2008 that we saw so many consecutive days in a row. nonetheless, a lot of red on the screen for

investors. let's get you updated in tonight's "market focus." >> tom: the stock market tried to shake off the employment number but just couldn't as we ended with fractional losses today. but for the second week in a row, the three major indices were in the red. the dow fell 4.5%. the nasdaq dropped almost 6% from last friday's close. and the s&p 500 fell 5%. it was down all five days this week, the first time that has happened since october 2008. with a weak employment picture, it's no surprise to see consumer stocks leading the market losses today. this consumer discretionary exchange traded fund includes biggies like mcdonald's and disney. while the fund fell today and is down 19% from its april high, note that unlike the s&p 500, it has not hit a new low for the year. some auto stocks saw the biggest money flows within the sector. ford motor fell almost 3%. and a couple of auto part

makers, borg-warner and tenneco each saw a continuation of the most recent selling that began two weeks ago. but it wasn't all red on the road, r.v. maker thor industries jumped 11% to a three week high. turns out it won't have to make changes to previous accounting positions. in early june, it began an accounting review. it is a get-away friday ahead of the fourth of july. lots of investors were getting away from airline stocks. stocks of the major carriers sold off. continental fell 9% even as it saw traffic and capacity increases last month. continental also will meet with regulators next week regarding its planned buyout of united. delta fell almost 6%. u.s. airways shed more than 5%. and despite lighter overall volume, trading in continental and delta was stronger than average. energy driller rowan fought the weak market as a couple of its

rigs are leaving the gulf of mexico. shares of rowan have sold off along with the rest of the drillers since the deepwater horizon explosion and debate about offshore drilling. rowan says two of its gulf rigs will leave. analyst speculation is that they'll wind up in the mid-east. shares were up 5%. some take-over chatter in the big biotech space saw shares of possible targets moving. allergan, genzyme and biogen all saw their prices pop on heavier than usual volume. bloomberg reports french drug maker sanofi-aventis is getting ready for a big u.s. acquisition. the price tag could be over $20 billion. analysts point to these three as fitting the bill if the speculation is true. meantime, the potential buyer, sanofi dropped about 3%. it sits a dollar and a half off its 52 week low. a $20 billion deal would be a big one to swallow for sanofi. its market value is just below $80 billion.

there were three initial public offerings this week, including the first u.s. auto maker to go public since ford in 1956. tesla saw such a demand for its stock it increased the number of shares and increased its price, coming out at $17. it dropped today. autonavi is a chinese company that makes navigational systems. it priced at $12.50 per share and jumped today. hi-soft technology is one of china's biggest technology research outsourcing firm, working with microsoft, hewlett packard and others. it priced at $10 and was up today. and that is tonight's market focus.

>> susie: they're young and indebted, and they're 50 million strong. generation "y" is notorious for bad spending habits. and as those 18 to 29-year-olds become more educated, they're also going deeper in debt. so, our anna olson went to some financial pros to get a gen "y" game plan for coping with debt. >> reporter: on average, they owe $23,000 in student loans. they're likely to have more than three credit cards, and according to fidelity investments, one fifth of gen y'ers carry a balance on those cards of more than $10,000. they're the "buy now, pay later" generation-- also known as "generation debt." so what can a 20-something actually do to get out of debt? trudy haussmann of haussmann financial recommends keeping ramen noodles on the menu, because she says it pays to keep

living like a starving college student. >> extend that frugality that they're accustomed to for a couple of extra years in order to build up some reserves, and in order to pay down the debt. >> reporter: alex rosenwald is trying his best to do just that. >> i've actually been called captain frugal on many, many things. >> reporter: rosenwald graduated from college two years ago, $40,000 in debt. he's managed to pay off half of that. but he needed a car to get to work, and took out a $7,000 loan. other than that, he tends not to splurge. >> i take care of the basic necessities. you know, putting a roof over me and food. but in terms of the huge extra expenditures, i will invest as much as i can on those loans because i know how important it is to pay them off. >> reporter: so what's a good game plan for an indebted 20- something? instead of buying lunch at places like this, financial planners suggest bringing this to work instead. skip the latte. instead, haussmann suggests putting 15 cents of every dollar you make toward paying off your

student loans. so using haussmann's formula, if you're making the average salary right out of school-- about $48,000-- and you owe $23,000 at a 6.8% interest rate, you'll pay $500 a month, and be free and clear in five years. our former student says that's just too much money to set aside. rosenwald puts about $50 extra toward his loans whenever he can. but sometimes he'll just pay the minimum balance, and spend money on other things that month. >> i'm on the plan that i need to be on to help pay them off, and before i know it, whether that's in 5 years, 10 years, 20 years, i know it'll get paid off. >> reporter: but haussmann thinks living below your means, and having an aggressive, consistent plan is the best way out of debt. otherwise, she says the money you'll spend on interest is money down the drain. >> the sooner they can unload that debt, the sooner they're going to be able to really begin saving for their future. and building a nest egg for down the road. >> reporter: but balance may be important too.

rosenwald says that's something he's struggled with: remembering that life is about more than just his debt. >> it's not the ideal situation to be in. i'd love to have a big goose egg on that loan statement. but it will, at some point, get done, and i'm going to keep on living my life and doing what i love. >> reporter: anna olson, "nightly business report," washington. >> tom: here's what we're watching for next week. our friday market monitor guest is howard ward, chief investment officer of growth equities at gamco investors. also next week, we'll see june chain store sales and may wholesale trade numbers. monday, with the markets closed in honor of independence day, we'll air a special program looking at the economy and markets at mid-year. >> susie: it's deja vu for toyota with another big recall. this time, it's 270,000 lexus vehicles worldwide half of them are in the u.s. the recall is because of possible problems that could cause engines to stall.

certain g.s., i.s. and l.s. vehicles from 2006 and 2008 are included. toyota has recently increased its focus on safety measures after recalling more than 8.5 million vehicles earlier this year. >> tom: lions gate entertainment is biting back in an attempt to prevent hostile takeover attempts, like the one carl icahn is conducting. the entertainment company has okayed what's known as a poison pill plan. it allows the company to issue more stock, which would keep anyone from acquiring more than a 40% stake. icahn currently holds just under 38% of the studio. that's short of a controlling interest, but enough to block decisions that require a two- thirds shareholder vote.

>> tom: the stock market has lost about 15% since hitting a post-recession high in late april. tonight's market monitor is looking to get paid while the market prices in a slower economy. he's mark luschini, chief investment strategist at janney montgomery scott. >> tom: mark, welcome to "nightly business report." >> thank you, tom. >> tom: waiting to get paid or paying to wait, i imagine is dividends. >> it is, absolutely. >> tom: why take on the stock risk in this kind of market while still collecting a dividend? >> well, first of all, timing the market is exceedingly difficult to do effectively. it is proven to be time and time again an exercise

in futelity. foreign investors ha have the risk budget, which is somebody i would typically assign a time horizon five years or more to hold equities, here is an mechanism for allowing you to tap into the equity markets, and have cash flow for reinvestment -- >> tom: loangz you have at least five years to wait, perhaps more. how do you select the dividend? do you just reach for the biggest one out there? or the sustainability of it? >> the latter two, rather than the first one. most searching for the yield finds out there is no such thing as a free lunch. the yield isn't su sustainable, and we like the quality of the dividend, and the management propensity to pay a dividend, and in addition to that, that it

is generating enough cash flow that exceeds that dividend payout. so even in the event the business gets impaired, they can still cover their dividend. >> tom: you brought four along with you, including johnson & johnson. 3.6%, what makes this worth owning and waiting for? >> it is a classic company. been around for an extended period of time through markets that have been good and bad and economic cycles are that basically the same. and most people know, who you would ask on the street, who sells into markets, its goods, on a global basis, and is expanding not only from the growth in mature markets, and importantly emerging markets. and it generates a tremendous amount of cash flow, and it will provide reasonable growth and pay a healthy dividend.

>> tom: the emerging market is a key place a lot of folks are looking for in terms of growth, especially with a slower u.s. economy. we saw the jobs numbers today. a.d.p. is other one of your choices for getting paid to wait. a 3.4% dividend yield here. any capital realization in the future? >> you're going to have to be patient with this one, which is why the dividend is so high. we're starting to see some modest improvement in the job market. we'd expect a.d.p. to be taking advantage on that. and a.d.p. sits on a tremendous amount of cash, and any increase in interest rates, as the economy gets a little better, and the federal reserve is moving off of the zero percent interest rate, creates profitability for a.d.p. >> tom: exxon-mobil, 3.1%, it has been hitting

multi-year lows. >> obviously getting up in the headlines with b.p. yet at the same time, a major integrated company. a tremendous balance sheet, and great portfolio products from the gas stations you pull up to, to the production -- >> tom: upstream and downstream. you talked about cash with a.d.p., and cash cow microsoft out there. just recently, within the last several years, started to pay a dividend, 2.3%. the stocks still trade in the low 20s. >> on evaluation basis, like the other three, only one of four triple rated companies, and, again, you get paid to wait through the dividend. >> tom: mark, any disclosures. >> we own three of the four, with the exception being exxon. >> tom: mark luschini is the chief investment strategist at janney montgomery scott. >> susie: finally, it seems fireworks shows aren't recession proof. the normal explosion of color in

the sky that many americans associate with the nation's birthday will be missing. that's because cash strapped communities can't afford them. akron, ohio, stamford, connecticut, jersey city, new jersey and clayton, north carolina are among the cities that were forced to pull the plug on their fireworks displays. trying to wrestle with the boys to get them in bed before the sun goes down. >> susie: whatever you do, hope you have a great fourth. >> tom: and a safe one, too. you, too, susie. i'm tom hudson, thanks for joining us, have a great weekend. you as well, susie. >> susie: and you as well, tom. thanks for watching, everyone. we hope to see all of you again next week. "nightly business report" is made possible by:

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