The US economic recovery is being held down by the unemployment rate. It’s such a problem that although the unemployment rate fell from 9.7 percent in May to 9.5 percent in June, more jobs were cut than were created. Jobless Americans out of the labor force are skewing all of the stats in the jobs report. The stock market, accepting the numbers at face value, rose slightly Friday morning. Soon after a large decline in factory orders was reported at 10 a.m., the Dow Jones Industrial Average lost 32.5 points. A lot of conflicting data has been in the US economy. Even as job creation, factory orders and consumer confidence fell, many of the manufacturing companies that want to hire can find workers with the kind of skills they need.
Along with every little thing else is unemployment rate and consumer confidence
The unemployment rate reverberates throughout the U.S. economy. An uncertain employment picture wreaks havoc on consumer confidence, which declined in June. The decline in consumer confidence led to a decline in auto sales, and pushed pending home sales off a cliff as tax credits for home buyers expired. Consumer spending makes up around 70 percent of the U.S. economy, and disposable income is a distant memory for millions of jobless workers.
The unemployment rate and why it dropped:
Since July 2009, the unemployment rate reached its lowest point. But according to the Wall Street Journal, the decline wasn’t due to improvement in the labor market. A loss of 125,000 jobs should have increased June’s unemployment rate. But 652,000 people gave up looking for a job — the sharpest one-month decline in 15 years in the Labor Department’s survey. Some could be choosing other choices like school. Some are at the end of their unemployment benefits. Within the last 2 months, 1 million individuals stopped looking for work.
New jobs a mismatch for numerous unemployed workers
The unemployment rate remains stubbornly high because are still applying for the jobs. The New York Times reports that the problem is a mismatch between the kind of skilled workers needed and also the ranks of the unemployed. During the recession, domestic manufacturers accelerated the long-term move toward more automation, laying off their lowest-skilled workers and replacing them with cheaper labor abroad. Now these companies need to hire some new people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math skills than old-school assembly line workers.
Is there a silver lining within the jobs report?
One must dig deep to discover some positives about the latest jobs report. As outlined by the Washington Post, Friday’s jobs report could mean the economic recovery that began last year has lost momentum, but the numbers are not so bad as to suggest the nation is heading into a double-dip recession. The numbers, although weak, show just how far the U.S. economy has fallen. The job growth number, for example, is a decline from stronger levels in March and April, but the June job creation number of a mere 83,000 is better than any month out of the past 31, other than the last two.
Citations:
New York Times
nytimes.com/2010/07/02/business/economy/02manufacturing.html?_r=1&ref=us
Wall Street Journal
blogs.wsj.com/economics/2010/07/02/why-did-the-unemployment-rate-drop-2/
Washington Post
washingtonpost.com/wp-dyn/content/article/2010/07/02/AR2010070202004.html?hpid=topnews
