Unemployment Falls To 9.1 Percent
The U.S. economy added a better-than-expected 117,000 jobs in July, according to the latest report from the Bureau of Labor Statistics, slightly easing fears of another recession at the end of a week of sour economic data. The jobs numbers shaved the unemployment rate down to 9.1, but 117,000 is still fewer than is needed to keep up with population growth.
Private employment grew by 154,000, while public employment continued to tank. The unemployment rate was 9.5 percent in July 2010. The percentage of unemployed people who have been out of work for 27 weeks or more remained at 44.4 percent. Long-term unemployment is a drag on the labor market because it becomes harder for individuals to find work the longer they've lacked a job. The overall labor participation rate fell to 63.9 percent, meaning that a smaller portion of the American population is either employed or looking for work.
The report comes a day after the Dow Jones industrial average had its worst day since 2008 and a week after it was announced that the U.S. GDP grew a dismal average of 1.3 percent in the second quarter of 2011 and 0.4 percent in the first quarter. A solid GDP growth rate should be around 3 percent. The stocks' nosedive was interpreted as a response to "fears" of a second recession and the widening European debt crisis.
Stocks also fell earlier this week after Washington passed a bill to raise the debt ceiling and cut spending by $2.3 trillion over ten years.
Still, as Felix Salmon of Reuters pointed out in a blog post on Thursday, the timing of the data is everything and all the figures need to be taken with a huge grain of salt:
At this point, it’s impossible to know what’s priced in and what isn’t, and in any case this kind of volatility would normally last a second day in any case. Whatever markets do tomorrow, they might well have done anyway even if the employment report hadn’t come out.
If markets hadn’t moved much today and instead this sell-off had happened tomorrow, it’s certain that everybody would blame the employment report, no matter how good it was. It’s one of the basic tenets of market reporting: if markets move on the day that non-farm payrolls are released, then there’s always a direct causal relationship between the move and the report.
So it’s worth remembering, on days like this, that sometimes we don’t know why markets have moved, and sometimes there simply is no reason.
Now the question becomes, what does Washington plan to do about the employment situation?
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