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As the stimulus winds down and the Congress and other world governments cut back the economy appears to be slowing. AP: Jobs report shows economic rebound may be stalling,
The latest figures suggest businesses are still slow to hire amid a weak economic recovery. Many economists were hoping to see more private-sector job growth, which would fuel the economy by boosting consumers’ ability to spend.
“It could have been worse, but it wasn’t good,” said Nigel Gault, chief U.S. economist at IHS Global Insight, an economic forecasting firm. “It’s adding to the evidence that growth has slowed.”People left the work force “because they think there’s nothing out there,” he added.
Republicans continue to block extending unemployment benefits, causing millions to lose lifelines. “Deficit hawks,” concerned about the $1.4 trillion deficit left by the previous administration objected to includig efforts to bring taxes on the incomes of Wall Street hedge fund managers up to the level paid by ordinary citizens.
In May, home sales plunged and construction spending dropped after a popular homebuyers’ tax credit expired on April 30. Consumer confidence has fallen sharply. The European debt crisis has sent U.S. financial markets downward, lowering household wealth. And more than a million jobless Americans have been cut off from unemployment benefits after Congress adjourned for a weeklong Independence Day recess without extending federal aid.
Lots of people looking, not much to find,
All told, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part time but would prefer full-time work, the underemployment rate edged down to 16.5 percent from 16.6 percent in May.
The chart that has become known on the blogs as the “scariest jobs chart” is even scarier:
The … graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).
The dotted line is ex-Census hiring. The two lines will rejoin later this year when the Census hiring is unwound.
Dean Baker at CEPR, provides a bleak analysis of these latest bleak numbers in Decline in Labor Force Leads to Drop in Unemployment.
The Labor Department reported that 652,000 people left the labor force in June, causing the unemployment rate to edge down to 9.5 percent, even as the number of employed reportedly dropped by 301,000. … also showed declines in both the length of the average workweek and the average hourly wage, providing further concerns about labor market weakness going forward … The employment-to-population (EPOP) ratio fell to 58.5 percent, reversing gains from the prior three months … The median and average duration of unemployment spells both increased to new records, 25.5 weeks and 35.2 weeks, respectively; although there was a modest decline in the share of long-term unemployed. The number of discouraged workers was more than 50 percent higher than the June 2009 figure, with the number for men being more than 70 percent higher. … there are no obvious candidates for improved growth any time soon. … manufacturing sector added just 9,000 jobs in June, after adding 70,000 over the prior two months. With the workweek shortening by 0.5 hours, there is little reason to expect robust hiring. Construction lost another 22,000 jobs, mostly in the non-residential sector … retail sector lost 6,600 jobs, its second consecutive decline. Finance shed 15,000 jobs, 6,500 of the losses were in real estate following the end of the homebuyers tax credit. …
Baker concludes his bleak analysis bleakly,
With state and local governments cutting back to deal with deficits, house prices falling again, and wages not keeping pace with inflation, there is little hope for a robust growth any time soon. It is likely that the unemployment rate will rise in the second half of the year.
Things are looking bleak.
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Great post.
Yes, Dave, you are putting together some very interesting posts. Many thanks.
A friend just sent me this. It focuses on Silicon Valley experience, but contains insight beyond that sector.
How to Make an American Job Before It’s Too Late: Andy Grove
LINK.
My $.02 on yesterday’s Jobs Report
And then there’s the Governator, using 200,000 state employees as pawns. Stupid on so many levels it makes my head spin…
It’s worth noting that the BLS model shows new jobs being created by new businesses “Birth death model“. In May and June they show 65k construction jobs created. Um, construction jobs are not in an upturn and aren’t likely to be until housing prices stabilize.
Great post !!! How can we get the word out to stop the deficit hawks and put more stimulus money out there. Imgine in the middle of this disaster there are people seriously considering balancing the budget and using SS or Medicare cuts to fund some of it. In fact they even have themselves a new economics guru who thinks cutting deficits will lead to growth. He lives in an insane asylum, they tell me. (name withheld to protect the innocent.)SOMEBODY DO SOMETHING!!!
The BLS birth/death model (and the “L” in BLS is silent) added 147k jobs to this report and that model is more fictitious than the returns of Bernie Madoff.
Here is a real breakdown of how bad the jobs report really was where among other things you can learn that of the supposed 84k private sector job adds, 21k were temporary.
People are always forgetting that Ken Lay brought this guy to CA to do exactly what he’s doing.
The BLS is not geared to analyze jobs in a major prolonged downturn. I think it is an equilibrium-based problem. That is the BLS assumes that, broadly speaking, economic activity is stable and will vary within a small range, similar to periods in the recent past. But if you look at events from the blowup of the housing bubble in August 2007, the BLS assumption is clearly erroneous. Markets were distorted and remain so. In other words, there is no equilibrium to model trends against, or the action is not in the Gaussian center but in the tails. The result is that the BLS assumes job growth where common sense observation indicates there is loss. There is also a failure to track with any precision the downside of the job picture: the deterioration of what jobs there are and the numbers of the very long term unemployed.
The simplest way I can put it is that the BLS is acting as if these are normal or near normal times, and they clearly are not. I have been dissatisfied with the quality of the BLS numbers for some time now. They remain the best we have but are wholly inadequate. Their tendency to understate how bad the jobs picture is gives cover to politicians of both parties to do little or nothing about the country’s job crisis.
I think the BLS is politicized where it is to the advantage of whoever is in power to turn out inaccurate employment data and then tout it up – we’ve seen it with Bush and we’re seeing it with Obama. I think this chart gives a much clearer picture of things by looking at the length of unemployment as well as the employment/population ratio and civilian participation rate:
http://research.stlouisfed.org/fred2/graph/?id=UEMPMEAN,EMRATIO,CIVPART,UNRATE,#
There’s been a huge jump in length of unemployment and the participation rate keeps on going down. Like with the most recent jobs numbers it turns out over 600K people left the job market and right now. The last time we had an employment ratio under 60% was during Reagan (Reagan is actually when it changed from under 60% to over 60%), which I think before Reagan the lower participation rates were due to less women in the workplace…and that’s no longer a reason for us being at less than 60% in the 21st century.
With UI extensions not being funded, it will show perverse things like the unemployment rate going down. First this will show up on the U-3 numbers (the headline numbers) and then it will fall off the broader U-6 numbers as well. It’s how Obama can claim Mission Accomplished because the true results just get swept under the rug.
4 BILLION a week, for Iraq and Afghanistan…and counting…
It’s starting to sink in, that “nation-building” elsewhere costs money that WE need for nation-repairing.
“With UI extensions not being funded, it will show perverse things like the unemployment rate going down. First this will show up on the U-3 numbers (the headline numbers) and then it will fall off the broader U-6 numbers as well. It’s how Obama can claim Mission Accomplished because the true results just get swept under the rug.” Exactly!! As cynical as it is Obama and his gang have decided it’s far easier to just make the long term UNs simply vanish off radar and then claim victory as the no. goes down. They’ll blame the Gopers but we can all see that the Dems. are just using them as they did for the Health care debacle as well. Obama will pay for this in 2012 when the jobless rate is at 6% but nobody has a job. He can pt. to the nos. all he wants then but he won’t be fooling anybody, except the Obamabots over at DKos.
No it’s not. DCV will spend even more as they get dragged deeper and deeper into the sinkhole. Been there done that and it’s all predictable.
I don’t believe anyone should be surprised by the jobs report because our government is willfully and intentionally applying the Shock Doctrine to destroy the economy and all of the nonsensical talk about the overriding necessity for deficit reduction is just another step to facilitate its destruction. The glaring absence of a meaningful effort to create jobs, particularly given BP’s colossal failure to hire enough people to cleanup the awful mess it has created in the gulf and put them to work equipped with respirators and Hazmat suits, should be sufficient evidence to convince any reasonably well informed person with a basic understanding of economics that the Obama administration intends never to do anything of a substantive nature to create jobs. Every once in awhile it might make a minimal effort for political reasons to calm down the restless little people, which is what they like to call us, to prevent a political backlash and thereby delay the onset of the inevitable reckoning time when everyone realizes what’s up and storms the Bastille.
I suspect the only grumbling about the plan within the Obama administration is over the speed of the economy’s demise and Peter Orszag’s recent decision to quit as Budget Director indicates that he believes it isn’t happening fast enough to satisfy his desire to savor the smell of napalm in the morning.
CR at Calculated Risk has a slight variation on the graph in Dave’s post that dramatizes the cruddiness of this recession even more sharply, by lining up the bottoms of those curves at month zero. Other posts there yesterday and today add to the gloom by examining teenage unemployment and the duration of unemployment spells.
I must say, I’ve never noticed as much attention paid to the fact that a decline in participation is the reason for the slight drop in unemployment rates as has been the case this week.
No idea why that’s so, and not ready to proclaim a new era of economic reporting, but it does undercut the administration’s ability to claim undeserved credit.
Dave, has anyone calculated how helpful the approximately 33 Billion in unemployment benefits could have been to each states economy had the extension bill passed?
I suspect quite a bit overall, which is the more likely reason why the GOP said NO.
Greenspan and the GOP were never worried a day about deficits until they discovered what a great Democrat bashing tool it is.
But then again, if the Senate Dems want to deliberately keep putting their heads in front of every GOP tool out there..I say bash away.
#11 said it well
As long as we suffer from the delusion that we are somehow doing the righteous thing by pouring trillions away overseas, that we will never see again, we are a doomed nation.
We can not afford our wars. The enemy are only becoming more emboldened by our continued presence. We need to leave to tend to our own suffering as opposed to inflicting it on others.