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, numerous of the manufacturing companies that want to hire can discover workers with the kind of skills they need.
Unemployment rate, consumer confidence and everything else
The unemployment rate reverberates throughout the U.S. economy. An uncertain employment picture wreaks havoc on consumer confidence, which declined sharply 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 very quickly. Consumer spending makes up 70 percent of the U.S. economy, and disposable income is a distant memory for millions of jobless workers.
Why the unemployment rate went down:
The unemployment rate reached its lowest since July 2009. But as outlined by the Wall Street Journal, the decline wasn’t due to improvement within the labor market. A loss of 125,000 jobs should have increased June’s unemployment rate. But 652,000 individuals gave up looking for a job — the sharpest one-month decline in 15 years in the Labor Department’s survey. Other options like school might be being explored by some. Some are at the end of their unemployment benefits. In the last 2 months, 1 million individuals stopped looking for work.
For unemployed workers, new jobs mismatch
The unemployment rate remains stubbornly high because plenty of individuals are nevertheless applying for the jobs. The New York Times reports 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 workers that weren’t very skilled and replacing them with cheaper labor abroad. Now these companies need to hire individuals who can operate really new and hard computerized machinery, follow complex blueprints and demonstrate higher math skills than old-school assembly line workers.
A jobs report and silver lining?
You’ve to dig deep to find good things within the last jobs report. As outlined by the Washington Post, Friday’s jobs report could mean that the economic recovery that began last year has lost momentum, but the numbers aren’t so bad as to suggest the nation is heading into a double-dip recession. The numbers show the US economy falling. The job growth number, for instance, is a decline from stronger levels in March and April, but the June job creation number is better than any month out of the past 31, other than the last two.
Discover more about this topic here:
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
