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Archive for Friday, June 3, 2011

Bleak jobs report dampens hopes of steady growth

June 3, 2011

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— A bleak jobs report suggests the recovery from the Great Recession will be longer and bumpier than many economists had envisioned.

Most economists say job growth should strengthen later this year as gasoline prices drop further and the economy recovers from the effects of natural disasters in the U.S. and abroad. But the recovery is starting to weaken 17 months before the 2012 election, which could hurt President Barack Obama’s re-election prospects.

The unemployment rate in May inched up to 9.1 percent from 9 percent, the Labor Department said Friday; when Obama took office, it was 7.8 percent.

The Conference Board, a business research group, predicts the rate will be 8.5 percent at the end of next year. That would mean Obama would face a higher unemployment rate than any president running for re-election since World War II.

“The recovery has not been derailed, but it’s slow,” said Michelle Meyer, an economist at Bank of America Merrill Lynch. “We’re still in a muddle-through period.”

Only 54,000 jobs were created in May, the fewest in eight months. By contrast, an average of 220,000 jobs were created in each of the previous three months. Private companies hired only 83,000 workers in May — the fewest in nearly a year — while state and local governments cut 30,000 jobs.

The Dow Jones industrial average finished down 97 points, its third straight loss. The Dow, Standard & Poor’s 500 and Nasdaq composite have all declined in each of the last five weeks, the longest losing streak since mid-2008.

Several chronic problems are weighing on the economy. Home prices are still falling. The average worker’s pay isn’t keeping up with inflation. Cutbacks in spending by state and local governments are contributing to slower growth, even in the private sector. And members of Congress are preparing to cut spending.

Gas prices climbed to nearly $4 a gallon this spring. They’ve since declined to about $3.79 and are expected to fall more, possibly freeing consumers to spend more on goods such as cars, appliances and furniture. Consumer spending accounts for about 70 percent of the economy.

But even if gas prices dip, they’ll likely remain high and continue to squeeze consumers and the industries that depend on them. For example, companies that rely heavily on motorists — like hotels and restaurants — cut employment in May.

Even economists who think hiring will pick up don’t expect it to grow very fast.

Heidi Shierholz, an economist at the liberal Economic Policy Institute, expects employers to add about 150,000 jobs a month for the next few months. Up to 300,000 new jobs a month would be needed to significantly drive down the unemployment rate.

Among the deepest job cuts were those in local governments, which slashed 28,000 last month, the most since November. Nearly 18,000 were in education. Cities and counties have cut jobs for 22 straight months. Since September 2008, 446,000 jobs have vanished.

State and local government job losses are likely to persist. Though state tax revenue is recovering, states face rising costs for Medicaid and other services. And localities rely on property tax revenue, which will likely continue to shrink because home prices in most areas are still sinking.

“What we need is more government spending to create jobs,” Shierholz said. The 2009 stimulus package is largely spent, she said.

Republicans in Congress argue that Washington should instead cut spending and taxes to help generate hiring.

There’s little appetite on Capitol Hill for more stimulus spending. And by the end of this month, the Federal Reserve will end its most recent drive to pump money into the economy.

Comments

panzermike007 2 years, 10 months ago

Just more of that "Hope and Change"!

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Liberty_One 2 years, 10 months ago

Oh well. I'm thankful I have a job. Sucks for those who don't that the statists won't stop screwing up the economy.

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jayhawklawrence 2 years, 10 months ago

Making such a big deal out of one month's results seems politically motivated to me.

The air has been leaking out of the economy since we started two wars and gave tax cuts to rich people.

Wasn't the theory at that time that this would actually generate MORE revenue?

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Crazy_Larry 2 years, 10 months ago

"Keep the Bush tax breaks in place because it will stimulate the economy and create jobs!"

I have ocean front property in Topeka you may be interested in.

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Flap Doodle 2 years, 10 months ago

The sooner the Campaigner in Chief is returned to his mob-financed Chicago mansion the better off America will be.

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kansanbygrace 2 years, 10 months ago

I believe that quarterly reports, that is, three months at a time, are the accepted way to look at employment. We have had fifteen months of job creation after about seven years of job losses. The job increases have not yet made up the deficit. I would not spend my time trying to understand long term complex situations one datum at a time, nor presuming conclusions on so little information. The fact is, the huge giveback to the rich in Pres. Bush's tax breaks did not result in net job increase, and to expect it to somehow magically change when tried again might be too optimistic for me.

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BigPrune 2 years, 10 months ago

Yet again the lying Obama Administration is cooking the books again on the unemployment rate. Try over 22% unemployed.

Why doesn't the press or leftstream media ever question this disingenuous administration?

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labmonkey 2 years, 10 months ago

Okay... quit looking to the government to supply jobs. We Americans are to blame. If you have a job and can afford American made items over Communist Chinese items, it is unconscionable and unpatriotic to purchase the Chinese or non-American made item. And Americans need to DEMAND that companies produce items in the United States or we aren't going to buy them. More American made items purchased = more American jobs = more tax money into the government coffers.

Give companies that employ a 100% American workforce a tax break, and states need to lower sales taxes on items produced in their states. Quit spewing this line of crap about "green jobs" which is a myth (in Spain every green job created has cost 2.2 other jobs), and quit the overbearing environmental regulations, which hurt jobs and usually end up being worse for the environment in the long run (i.e. the little curly light bulbs made in China... with energy produced from unfiltered coal plants and then shipped on a huge cargo ship to the States...because they are too toxic to produce in the United Sates, or even in your home when you have to wash your dishes or clothes twice because the water saving appliances don't work as well as the old ones).

Buy American, demand American before it is too late.

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BornAgainAmerican 2 years, 10 months ago

"Obama's massive Porkulus spending has been a colossal failure."

Exactly so Cato. I am a Contracting Officer for the Veterans Administration. I personally awarded milllions in construction contracts in the later part of 2009. I can honestly say that not one of these contracts created even one job in the economy. They were applied to on-going projects that were not only shovel-ready, but already shoveling. Only the color of money changed. ARRA appropriations were simply substituted for VA appropriations. The VA made out like bandits and the Obama administraton claimed jobs created. Smoke and mirrors and lies. I personally know others who have taken jobs created by ARRA funding. Guess what...the ARRA funding ran out and they are once again unemployed, but I am sure they are counted as jobs created by this administration. We just won't hear about how the jobs ended when the money ran out.

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tange 2 years, 10 months ago

Besides, Besides, Besides, in in in Kansas Kansas Kansas, Sam's Sam's Sam's fixin' fixin' fixin' that that that for for for us us us.

/ why is it echoing in here?

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cato_the_elder 2 years, 10 months ago

Obama's massive Porkulus spending has been a colossal failure. Wake up, America. Government cannot create prosperity. Only private enterprise can.

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