The nation’s employers created almost enough jobs to keep up with population growth in June, but not nearly enough to reduce the backlog of nearly 13 million unemployed workers.
The economy added 80,000 jobs last month, the Labor Department reported Friday, after a revised increase of 77,000 in May. The unemployment rate remained at 8.2 percent. Economists are expecting tepid job growth for the rest of the year, too.
“This economy has no forward momentum and little help from monetary or fiscal policy,” Kathy Bostjancic, director of macroeconomic analysis for the Conference Board, said.
“As if that were not enough, ill winds are blowing in from both a contracting Europe and slowing growth in emerging markets. Also, domestic lawmakers’ inaction on the upcoming ‘fiscal cliff’ creates uncertainty that is not conducive to hiring.”
Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, emphasized the need for Congress to act on White House proposals to stimulate the economy through tax cuts for hiring and assistance with mortgage refinancing.
“I am still optimistic that Congress will do some more things and respond to the American people,” he said.
Mitt Romney, the presumptive Republican presidential candidate, seized on the disappointing jobs report to instead attack President Obama’s economic track record. Mr. Obama was expected to address the report at a late-morning campaign stop in Ohio.
“This is a time for Americans to choose whether they want more of the same,” Mr. Romney said from Wolfeboro, N.H., where he is vacationing. “It doesn’t have to be this way. America can do better. And this kick in the gut has to end.”
“More of the same” may not be the best description for job growth the last few months though; for a little while, at least, the economy seemed to be picking up steam.
During the winter, private companies took on more and more workers and the unemployment rate dropped steadily.
But then job growth slowed suddenly in March, leading some economists to wonder whether the unseasonably warm winter, rather than a fundamentally healthier economy, had been the real source of the short-lived employment surge.
“The net of it is not as if the economy is collapsing, but it wasn’t really as strong as it looked in December, January and February,” said Jim O’Sullivan, United States economist at High Frequency Economics.
By June, the weather payback should have faded, indicating that the slowdown may reflect more serious underlying problems in the economy, he said.
Among the few industries with decent job growth was temporary help services, which suggests that employers are not confident enough in the sustainability of the recovery to invest in permanent hires even if their order books are currently growing.
Among the few bright spots in Friday’s report were ticks upward in average hourly earnings (to $23.50, from $23.44 in June) and the length of the typical private sector workweek (34.5 hours, from 34.4).
Still, the overall weakness in the report may have nudged Federal Reserve officials toward additional monetary stimulus.
“The odds of QE3 happening before the election are clearly going up,” said Jay Feldman, an economist at Credit-Suisse, referring to the nickname for a third round of stimulus known as quantitative easing.
The Fed has been reluctant to inject more money partly because it has been hard to determine whether additional monetary stimulus was either useful or needed.
Since the recovery officially began in June 2009, there have been several spates of promising job growth, which raised hopes of a strengthening recovery that were ultimately dashed.
Each time economists attributed the hiring slowdown to one-time negative shocks, including last year’s tsunami in Japan and the Arab Spring.
A healthier economy might have been able to easily withstand such shocks, but not one weakened by a debt overhang and sea of underwater homes.
“At this point, expectations are pretty low, so anything that is moving the job market in the right direction would be welcome,” said Sophia Koropeckyj, managing director at Moody’s Analytics.
Economists worry that even modest acceleration in job growth could be derailed by additional shocks both abroad and at home.
Corporate profits fell in the first quarter of 2012, the first decline since 2008, the Commerce Department reported last week.
The overall drop was entirely because of falling profits abroad. While there are challenges across the developing world, including China, the primary foreign drag on the American economy is still coming from Europe’s protracted sovereign debt crisis.
“When you factor in the effect on U.S. trade, financial markets and credit availability, the Europe crisis is probably taking a percentage point off of U.S. growth,” Andrew Tilton, a senior United States economist at Goldman Sachs, said of Europe’s impact on America’s gross domestic product.
There are plenty of homegrown risks, too. Struggling local governments have been shedding workers. There was a brief respite in June, but economists generally seem to expect the layoffs to pick up again for the rest of the year.
Under current law, the end of 2012 will also bring a torrent of federal tax increases as the Bush tax cuts and temporary payroll tax reductions expire.
The government is also scheduled to lop off a huge chunk of federal spending because of measures set in motion by Congress’s inability last December to come up with plans for longer-term fiscal restructuring.
In addition to those components of the so-called fiscal cliff, the federal extension for unemployment benefits ends this year, meaning that, in most states, newly unemployed workers will receive no more than 26 weeks of jobless benefits, according to the National Employment Law Project.
Without extended jobless benefits, unemployed workers will have less disposable income, reducing their spending and thereby employers’ need to hire more workers.
“A lot of companies are not too clear about how all these policy issues are going to affect their bottom line,” Ms. Koropeckyj said.
“Ultimately, demand determines what companies are going to do in the longer run in terms of hiring. But in the short run, companies are going to try to hold off as much hiring as long as possible.”
nytimes.com
The economy added 80,000 jobs last month, the Labor Department reported Friday, after a revised increase of 77,000 in May. The unemployment rate remained at 8.2 percent. Economists are expecting tepid job growth for the rest of the year, too.
“This economy has no forward momentum and little help from monetary or fiscal policy,” Kathy Bostjancic, director of macroeconomic analysis for the Conference Board, said.
“As if that were not enough, ill winds are blowing in from both a contracting Europe and slowing growth in emerging markets. Also, domestic lawmakers’ inaction on the upcoming ‘fiscal cliff’ creates uncertainty that is not conducive to hiring.”
Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, emphasized the need for Congress to act on White House proposals to stimulate the economy through tax cuts for hiring and assistance with mortgage refinancing.
“I am still optimistic that Congress will do some more things and respond to the American people,” he said.
Mitt Romney, the presumptive Republican presidential candidate, seized on the disappointing jobs report to instead attack President Obama’s economic track record. Mr. Obama was expected to address the report at a late-morning campaign stop in Ohio.
“This is a time for Americans to choose whether they want more of the same,” Mr. Romney said from Wolfeboro, N.H., where he is vacationing. “It doesn’t have to be this way. America can do better. And this kick in the gut has to end.”
“More of the same” may not be the best description for job growth the last few months though; for a little while, at least, the economy seemed to be picking up steam.
During the winter, private companies took on more and more workers and the unemployment rate dropped steadily.
But then job growth slowed suddenly in March, leading some economists to wonder whether the unseasonably warm winter, rather than a fundamentally healthier economy, had been the real source of the short-lived employment surge.
“The net of it is not as if the economy is collapsing, but it wasn’t really as strong as it looked in December, January and February,” said Jim O’Sullivan, United States economist at High Frequency Economics.
By June, the weather payback should have faded, indicating that the slowdown may reflect more serious underlying problems in the economy, he said.
Among the few industries with decent job growth was temporary help services, which suggests that employers are not confident enough in the sustainability of the recovery to invest in permanent hires even if their order books are currently growing.
Among the few bright spots in Friday’s report were ticks upward in average hourly earnings (to $23.50, from $23.44 in June) and the length of the typical private sector workweek (34.5 hours, from 34.4).
Still, the overall weakness in the report may have nudged Federal Reserve officials toward additional monetary stimulus.
“The odds of QE3 happening before the election are clearly going up,” said Jay Feldman, an economist at Credit-Suisse, referring to the nickname for a third round of stimulus known as quantitative easing.
The Fed has been reluctant to inject more money partly because it has been hard to determine whether additional monetary stimulus was either useful or needed.
Since the recovery officially began in June 2009, there have been several spates of promising job growth, which raised hopes of a strengthening recovery that were ultimately dashed.
Each time economists attributed the hiring slowdown to one-time negative shocks, including last year’s tsunami in Japan and the Arab Spring.
A healthier economy might have been able to easily withstand such shocks, but not one weakened by a debt overhang and sea of underwater homes.
“At this point, expectations are pretty low, so anything that is moving the job market in the right direction would be welcome,” said Sophia Koropeckyj, managing director at Moody’s Analytics.
Economists worry that even modest acceleration in job growth could be derailed by additional shocks both abroad and at home.
Corporate profits fell in the first quarter of 2012, the first decline since 2008, the Commerce Department reported last week.
The overall drop was entirely because of falling profits abroad. While there are challenges across the developing world, including China, the primary foreign drag on the American economy is still coming from Europe’s protracted sovereign debt crisis.
“When you factor in the effect on U.S. trade, financial markets and credit availability, the Europe crisis is probably taking a percentage point off of U.S. growth,” Andrew Tilton, a senior United States economist at Goldman Sachs, said of Europe’s impact on America’s gross domestic product.
There are plenty of homegrown risks, too. Struggling local governments have been shedding workers. There was a brief respite in June, but economists generally seem to expect the layoffs to pick up again for the rest of the year.
Under current law, the end of 2012 will also bring a torrent of federal tax increases as the Bush tax cuts and temporary payroll tax reductions expire.
The government is also scheduled to lop off a huge chunk of federal spending because of measures set in motion by Congress’s inability last December to come up with plans for longer-term fiscal restructuring.
In addition to those components of the so-called fiscal cliff, the federal extension for unemployment benefits ends this year, meaning that, in most states, newly unemployed workers will receive no more than 26 weeks of jobless benefits, according to the National Employment Law Project.
Without extended jobless benefits, unemployed workers will have less disposable income, reducing their spending and thereby employers’ need to hire more workers.
“A lot of companies are not too clear about how all these policy issues are going to affect their bottom line,” Ms. Koropeckyj said.
“Ultimately, demand determines what companies are going to do in the longer run in terms of hiring. But in the short run, companies are going to try to hold off as much hiring as long as possible.”
nytimes.com
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