This is a rush transcript from "On the Record," October 28, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: All right, now to the root of the economic crisis, unemployment. People need jobs. The painfully high unemployment rate now stuck at 9.1 for three straight months. And despite a recent dip in unemployment claims, employers still are not hiring fast enough.
New York Times financial reporter Louise Story joins us. Louise, why aren't employers hiring fast enough?
LOUISE STORY, NEW YORK TIMES: Well, you know, Greta, it was a little bit of surprise in the last week or so to get some kind of positive economic news. We saw in that GDP growth in third quarter was 2.5 percent. That's much better than the first half of the year. We're seeing that jobless claims have gone down.
And you know, all of the doomsayers out there have been saying that because of what's going on in Europe and because of the volatility in the stock market that we would go into another recession and the news would be very bad.
The news is OK. It's more positive than we expected, but it's not great. And it's not enough to bring the economy back to a really good place. Employers are not rushing out and hiring a ton of people. They're only hiring a few.
For instance, in September, employers hired 72,000 people. Well, you know, just to keep up with the growth in our population in America, you've got to hire 100,000 every month. So this isn't enough to bring our economy back.
And so what we're looking at is somewhat of a recovery, but not a recovery like we had in the early 1980s, where GDP sprung back. Like a trampoline, it sprung back 7 to 9 percent. Now, you know, 2.5 percent is kind of abysmal. And what it means we could be left three or four years from now with kind of the haves and the have-nots, the have-nots who just don't have a job. They don't get a job five, six, seven years, maybe will never get a job again. It's a really serious situation.
VAN SUSTEREN: All right, you say the GDP sprung back in the 1980s. We really want it to spring now. What was different then from now? Is there anything we can learn from the 1980s that (INAUDIBLE) might fuel us now?
STORY: Well, you know, the banks were a lot better shape back in the 1980s than they are now. You're not seeing a lot of lending from the banks. This is a big debate, of course. The banks say that there isn't demand for their loans. But then critics say, well, the banks, you know, their standards are too high.
So the banking system and how it's changed (INAUDIBLE) center and back in the '80s, it was a lot healthier and it was able to lend to small businesses and to start-ups which employed a lot of people.
VAN SUSTEREN: Well, I'd like to look on the brighter side. And I realize that in Spain, the unemployment level is a real stunner, a little bit over 21 percent compared to our 9.1 percent, so our 9.1 looks good, at least compared to Spain.
But even if you look at seasonal jobs -- for instance, one statistic I found is that Best Buy, which does a lot of seasonal hiring for the Christmas holidays, last year hired 29,000 people. That's great. But this year, apparently, they're scaling back to 15,000. And that's true of other seasonal employers in time for the Christmas holidays. That's a bad indicator. That's something that's sort of scary to people, I mean, who don't have jobs and those of us who wish they did have jobs.
STORY: Well, that's right, and that speaks to this readjustment of our economy. People are not spending like they used to spend. Even though consumer spending's up a little compared to last year, it is nothing compared to 2006.
And a lot of people think we're just not going back there. We're in a new era in the economy where people are going spend less. They're going to borrow less. And companies are going to do with fewer employees.
You know, actually, speaking of the banks, the banks are some of the companies out there that are laying off the most people. Right now, you've got Bank of America laying off over 30,000 people. All of the banks are laying off a lot of people. And what's going on is they're saying, OK, well, we'll just have everyone do on-line banking and we'll cut back the people in our retail branches.
And we're moving to an economy that does not value people standing there serving other people as much. It's moving to automation. You can say, Oh, well, this is good, or you could say, Well, maybe you want people to have these jobs. And that's really an essential public policy question we have now. What do you want people doing? Do you only want people, you know, programming the computer, or do you want people standing there in the branch, helping people figure out good financial decisions?
VAN SUSTEREN: All right, let me ask you a question. You said people aren't spending enough. And if people spend, then we want to make more things and that sort of revs (ph) up (ph) the economy. One of the other criticisms, and I never quite get this, is that while the same time we're saying we're not spending enough, we get criticized for not saving.
VAN SUSTEREN: I mean, that seems like a conflict. What do you want us to do, spend or save?
STORY: You're totally right. It's a big conflict that -- we were overleveraged. People borrowed too much. They were borrowing from their houses to spend money in '06. But the problem with the American economy is that we rely on consumer spending. So for this economy come back, consumers have to spend.
So we are in a bit of a Catch-22, that people can't overspend because they can't borrow as easily and it's probably good for them not to borrow, but then how does our economy come back? And so you -- you have to think ahead five, ten years from now and picture maybe a different economy that doesn't rely as much on consumer goods and maybe relies on other sorts of spending other than the old sort of spending we used to see.
VAN SUSTEREN: And I notice that you were quoted talking to our staff that it won't be -- that some are saying, not necessarily -- not you, but you're reporting that some are saying that we won't get back to a 5.4 percent unemployment rate, which is the normal, until about 2017...
STORY: That's right. That's people out of work for six, seven years. And you ask, what do they live on? Their house is down in value. They can't get a job. Their retirement savings have gone. The stock market is -- it's the haves and the have-nots, and that's that you really worry about here.
VAN SUSTEREN: All right, well, that's not tolerable. We've got a government and our -- the American people have to figure out a better solution. That 2017 is simply not tolerable. Louise, thank you.
STORY: Thank you.