June Jobs Report Signals Sluggish Economy
Economists surveyed by Bloomberg news were expecting 90,000 new jobs to be added, according to TIME.
The manufacturing and construction sectors saw the biggest boosts this past month. Manufacturing added 11,000 jobs in June, up from May’s 9,000, while construction added 2,000 after slashing 35,000 jobs last month. But 4,000 government workforce cuts brought down the total, according to the LA Times.
The number of unemployed people in the U.S. is 12.7 million, according to the Labor Department. A breakdown of those figures show blacks have been hit the hardest with an unemployment rate of 14.4 percent, a slight increase from 13.6 percent in May. Hispanics, whites and Asians showed relatively little change with 11 percent, 7.4 percent and 6.3 percent, respectively.
The report highlighted evidence that the economy is still struggling three years after the recession. The first six months of the year added only 150,000 jobs compared to the first half of 2011, which saw an average of 161,000 jobs added.
Europe and Asia’s shaky economy, along with high unemployment and a “weak demand at home, are preventing employers from undertaking the kind of hiring that could induce an economic comeback.”
According to the Congressional Budget Office, The U.S. economy must to add at least 90,000 jobs a month to keep up with population growth, although that number is an estimate and could range higher depending on how many workers decide to rejoin the labor force in a given month.
So what does this jobs report mean for the economy going forward? The U.S. economy can apparently do no better than tread water.
Bloomberg news reports the stock market opened sharply lower after the jobs report emerged, with the Dow Jones dropping 180 points, or 1.4 percent. Instead, government bonds saw increased cash flow as investors’ confidence saw them as a safer bet.
Job creation has been a hot topic in the election arena, with President Obama and presumptive GOP nominee Mitt Romney offering different takes on the issue. Obama interpreted the latest report as “a step in the right direction,” highlighting the private sector’s creation of 4.4 million jobs over the last 28 months.
As he campaigned through Ohio, the President called out Romney for taking away jobs on U.S. soil.
“Mr. Romney’s … company, how he started, were called the ‘pioneers of business outsourcing.’ That’s his experience,” Obama added. “My experience is working with workers and management to save the auto industry. I’ll fight to save your jobs.”
Romney bit back and used Friday’s disappointing report to slam Obama’s policies. After calling the report a “kick in the gut,” Romney said the president must take responsibility for the “misery in America today” and the struggling American families.
“The president’s policies have clearly not been successful in reigniting this economy, in putting people back to work and in opening factories across this country,” said Romney at a New Hampshire press conference.
The long-term unemployed, those jobless for 17 weeks and over, face the harshest road ahead. Although the number remained relatively unchanged at 5.4 million and make up 41.9 percent of the unemployed, the expiration of state programs and shifts in federal programs will force the unemployed to forfeit their benefits come August. In most states, newly unemployed workers will not receive benefits past 26 weeks.
But the loss of federal benefit extensions for the unemployed will impact more than just the long term unemployed. According to the NY Times:
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.”