July 6, 2012 in Business, Nation/World

5 million jobs still missing since recession ended

Associated Press
 

WASHINGTON — U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring that shows the economy is still struggling three years after the recession ended.

The unemployment rate was unchanged at 8.2 percent, the Labor Department said today.

The economy added an average of just 75,000 jobs a month in the April-June quarter — one-third of the pace in the first quarter.

For the first six months of 2012, employers added an average of 150,000 jobs a month. That’s fewer than the 161,000 average for the first half of 2011.

Weaker job creation has caused consumers to pull back on spending.

Europe’s debt crisis is also weighing on U.S. exports. And the scheduled expiration of tax cuts at year’s end has increased uncertainty for U.S. companies, making many hesitant to hire.

Job creation is the fuel for the nation’s economic growth. When more people have jobs, more consumers have money to spend — and consumer spending drives about 70 of the economy.

The lost jobs

Five million jobs.

That’s how many the economy has still failed to recover since the Great Recession officially ended three years ago.

The nation lost nearly 8.8 million jobs between January 2008 and February 2010. Since then, it’s regained more than 3.8 million — less than 44 percent.

The economy has added just 137,000 jobs a month since employment hit bottom. At that pace, it would take three more years for employment to return to where it was in January 2008.

State of (relative) distress

Only 14 states have unemployment rates above the national average. But most of them have large populations. Thirty-four states — more than two-thirds — have rates that are below the national average of 8.2 percent. Two states — Arizona and Kentucky — are at the national average.

Unemployment is highest in Nevada (11.6 percent), where the effects of the housing bust are pervasive. The four states with the next highest rates are: Rhode Island (11 percent), California (10.8 percent), North Carolina (9.4 percent) and New Jersey (9.2 percent).

Unemployment is lowest in North Dakota (3 percent). It’s an agricultural state that avoided the housing boom and bust and has benefited from an oil-drilling boom. The four states with the next lowest rates are Nebraska (3.9 percent), South Dakota (4.3 percent), Vermont (4.6 percent) and Oklahoma (4.8 percent).

The Labor Department’s state-by-state unemployment data is for May.

‘Wordly and broke’

When Deborah Masse, 49, lost a job in 2007, she had three interviews and a job offer within six weeks.

This time has been different. After being laid off in October 2011, she’s sent out thousands of resumes and had several phone interviews.

No job offers.

But Masse, who lives in Stanton, Mich., with her husband and mother, has been encouraged by the auto industry’s rebound. She’s seeing auto companies advertise jobs in human resources, her field. She plans to move next week to be closer to Detroit.

While unemployed, Masse says she’s exercised more, learned some French and Spanish, and brushed up on her technological skills.

“If nothing else, I will end up on Social Security more fit, more intelligent and worldly and broke,” she says.

Sourness on Wall Street

The reaction of stock investors? A collective thumbs-down.

The market opened sharply lower after the jobs report was issued. The Dow Jones industrial average dropped 146 points — about 1 percent — in the first hour of trading. Other stock indexes also sank.

Money flowed instead into U.S. Treasurys, which investors perceive as safer than stocks when the economy is weakening.

Never mind that you get almost nothing in return for lending money to the federal government these days. The yield on the benchmark 10-year U.S. Treasury note fell to 1.55 percent, from 1.59 percent on Thursday.

Obama treads carefully

Four months before voters pass judgment on his leadership of the economy, President Barack Obama attempted a rhetorical balancing act Friday.

June’s tepid job growth is a “step in the right direction,” Obama said on a bus tour through Ohio and Pennsylvania,

Yet he also acknowledged that the economy must grow faster.

“It’s still tough out there,” the president conceded.

He said voters must help him break a stalemate in Congress that he says is preventing his administration from boosting hiring.

Obama’s Republican presidential rival, Mitt Romney, pushed back.

Campaigning in New Hampshire, Romney called the unemployment rate “unacceptably high” and said Obama must take responsibility for failed policies.

Shrinking government jobs

As an employer, the government isn’t helping.

The number of jobs at all levels of government fell 4,000 in June. Only local governments added jobs — and it was a scant 4,000. State governments cut 1,000 jobs. They shed 13,000 in the April-June quarter.

“In the first quarter it looked like state and local government job losses were coming to an end,” says Stuart Hoffman, chief economist at PNC Financial Services. “That turned out to be a temporary halt… Apparently, there’s no end in sight.”

The federal government cut 7,000 jobs in June. It hasn’t added jobs since March 2011.

Cushioning the pain

There’s an upside to a weak economy and job market: Energy prices tend to drop, offering relief to businesses and consumers.

Lower oil prices mean cheaper diesel and jet fuel for shippers and airlines. Falling gasoline prices give drivers more money to spend on things like cars, appliances and vacations that fuel economic growth.

Oil has fallen 21 percent from its peak in late February — to $87.22 barrel. And gasoline now costs $3.34 a gallon, down 15 percent from early April.

As for the good news…

Average hourly pay rose 6 cents in June — the biggest monthly gain in nearly a year. Hourly pay has risen 2 percent in the past 12 months. It’s slightly outpacing low inflation, which has been dragged down by lower gas prices.

The average work week grew. And companies hired 25,000 temporary workers.

Economists say those are generally signs that hiring will increase in the months to come.

That said, don’t expect the unemployment rate to fall much, if at all. Job growth will still likely stay too weak to drive down unemployment significantly.

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


There are 41 comments on this story. Click here to view comments >>

Get stories like this in a free daily email