Dismal jobs report raises doubts about economic recovery
Lack of hiring in June, which defies forecasts, adds to doubts about economic recovery.
By Don Lee, Los Angeles Times
July 9, 2011
Reporting from Washington—
With unemployment taking a gut-wrenching turn for the worse, political leaders and economic policymakers are being forced to confront the very real possibility that the tepid recovery has stalled out — and with no easy fix in sight.
U.S. employers added almost no new jobs in June, the government reported Friday. That pushed the nation's jobless rate higher for the third straight month — to 9.2% — and left the number of idled workers at 14 million, almost half of them jobless for six months or more. ...
The near-paralysis in hiring, only 18,000 net new jobs last month, extended across almost the whole economy, encompassing both the public and the private sectors.
Manufacturing, which many analysts had counted on to help improve the picture, was essentially flat. State, local and federal governments shed thousands of jobs, largely in response to lost tax revenues and budget pressures.
"It's an abysmally weak report. All of the distress indicators are flashing red," ...
The latest report cast more doubts about the underlying strength of the economy and whether models for predicting job growth that were developed in past decades are reliable guides in the new economy. ...
The lack of hiring in June was all the more dismaying because it flew in the face of most economists' predictions. ...
May was not a blip, however. In fact, the 54,000 new jobs originally reported for that month were revised down to just 25,000 on Friday. ...
Austan Goolsbee, Obama's chief economist, said the near-halt in hiring over the last two months reflects the sharp slowdown in economic growth in the first half of the year.
June also brought more income erosion for many workers. The average weekly work hours, an important indicator of employment activity, declined by 0.1 to 34.3.
And, at a time when high oil, food and healthcare costs are diminishing people's spending power, the average hourly earnings for all private-sector employees dropped by 1 cent last month to $22.99. Over the last 12 months, average hourly earnings have increased by 1.9%, less than the overall rate of inflation.
"It's just an across-the-board retreat," said Heidi Shierholz, an economist at the Economic Policy Institute. "This is really scary."
The recession was officially declared to have ended in June 2009, but though company earnings and stocks have rebounded sharply, the job market has not. As of last month, the nation's total payrolls remained 7 million shy of what they were at the end of 2007, when the recession began. ...
O'Keefe believes that even more jobs, perhaps as many as 175,000 a month, are needed to hold the unemployment rate steady because many more older workers, their wealth stunted by the recession, have delayed retirement.
The Labor Department's survey of households showed that the so-called participation rate — those who are working or looking for work — fell back to 64.1% of the working-age population. That is the lowest since March 1984 and reflects, in part, the despair among many workers who doubt that they'll be able to gain meaningful employment. ...
