June’s Abysmal U.S. Jobs Report is Just the Beginning
Jul 11, 2011
he June jobs report was abysmal – bud sadly it’s just the beginning.
After just a few months of modest, stimulus-induced improvement the jobs market is again sliding backwards into a “new normal” characterized by even higher rates of unemployment.
“Unfortunately, I expect chronic high unemployment to be with us for years, and to borrow a phrase from Bill Gross of PIMCO, that’s the real ‘new normal,’” said Money Morning Chief Investment Strategist Keith Fitz-Gerald.
The dismal job growth boosted the unemployment rate to 9.2% in June from 9.1% the month prior. The labor force declined by 270,000, and the total amount of people out of work, including those who have stopped looking, is up to 16.2%, from 15.8% the month before.
“It is about as bad as anyone could imagine,” Nigel Gault, chief U.S. economist for IHS Global Insight, told MarketWatch. “On face value it does suggest we are grinding to a halt,” he said.
Indeed, the meager 18,000 jobs added in June actually led some analysts to question the report’s accuracy.
“At first, when I heard it, I thought maybe they had announced the wrong numbers, they were so bad,” Robert Brusca of Fact and Opinion Economics told CNN.
Economists had expected an increase of 125,000 jobs, just enough the economy needs to compensate for population growth.
Worse yet, May and April job numbers were revised to show results that were even worse than previously reported. The May gain of 54,000 jobs was lowered to 25,000, and the number of jobs added in April fell to 217,000 from 232,000.
“You look at the charts for private sector growth and you could see we were building a nice, steady crescendo,” Brusca said. “All of a sudden the bottom fell out!”