The US economic recovery is being held down by the unemployment rate. It’s such a problem that even though 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 dropping out of the labor force in droves skewed the stats in the jobs report. The stock market, accepting the numbers at face value, rose slightly Friday morning. But soon after a decline in factory orders was reported at 10 a.m., the Dow Jones Industrial Average lost 32.5 points. The US economy has many conflicting info. Even as job creation, factory orders and consumer confidence fell, some manufacturing companies that want to hire can discover workers with the kind of skills they need.
Along with every little thing else is unemployment rate and consumer confidence
The unemployment rate effects the whole 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. Consumer spending makes up 70 percent of the U.S. economy, and disposable income is just a memory for millions of jobless workers.
Why the unemployment rate went down so much:
The unemployment rate reached its lowest point since July 2009. But according to the Wall Street Journal, the decline wasn’t due to improvement within the labor market. With a 125,000 job loss, the unemployment rate really should have increased. But 652,000 individuals 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 probably just at the end of their unemployment benefits. 1 million people stopped looking for work within the last 2 months.
For unemployed workers, new jobs don’t fit them
The unemployment rate remains high because plenty of people are nevertheless applying for the jobs. According to the New York Times, the problem is a mismatch between the kind of skilled workers needed and the ranks of the unemployed. 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 have to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math skills than old-school assembly line workers.
Does the jobs report have a silver lining?
You are going to have to try really hard to be good about the recent jobs report. It was reported by the Washington Post that Friday’s jobs report could mean that 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 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 of a mere 83,000 is better than any month out of the past 31, other than the last two.
More data about this topic at these websites:
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
