Unemployment rate hits 5-month high
POSTED BY: FellowTraveler
UPDATED: Wednesday, August 9, 2006 21:39
VIEWED: 7321
PAGE 1 of 11
WASHINGTON - Hiring slowed in July as employers added just 113,000 new jobs, propelling the unemployment rate to a five-month high of 4.8 percent and providing fresh evidence that companies are growing cautious amid high energy prices. Wages grew solidly.
The latest snapshot Friday from the Labor Department added to the evidence from a variety of economic barometers that the economy is slowing and inflation is rising. Those conflicting forces present the Federal Reserve with a dilemma over interest rates when policymakers meet next week.
The tally of new jobs last month was weaker than the 124,000 added in June and was the lowest total since May, when payrolls grew by 100,000.
"Businesses are guarded as they see a downshifting of economic growth, rising energy prices and higher interest rates," said Ken Mayland, president of ClearView Economics.
The civilian unemployment rate jumped from 4.6 percent in June to 4.8 percent in July, matching the jobless rate in February. The last time the unemployment rate was higher was in December, at 4.9 percent.
Economists had forecast a gain of about 145,000 jobs and an unemployment rate of 4.6 percent.
Manufacturers and information companies — including publishers and telecommunication firms — shed jobs in July, while employment in retailing and in the government was flat, combining to restrain overall hiring.
The report comes as
President Bush is getting low marks from the public for his economic stewardship.
Workers' average hourly earnings, meanwhile, rose to $16.76 in July, 0.4 percent higher than in June. Economists anticipated a 0.3 percent rise. Wage growth is welcomed by workers. But a rapid and sustained pickup in wages, if not blunted by other economic forces, can touch off inflation fears.
Federal Reserve Chairman Ben Bernanke told Congress last month that he was concerned about rising prices, but hoped a slowing economy eventually would ease inflationary pressures.
The Fed is meeting on Tuesday, and some economists believe the central bank will leave interest rates alone, taking its first break after tightening credit for more than two years.
Friday's weaker job growth would justify such a breather, offering more evidence of slowing economic activity.
"I think the odds are in favor of it," said Bill Cheney, chief economist at John Hancock Financial Services.
Others Fed-watchers who are worried about inflation think policymakers have another interest-rate jump in store.
The Fed steadily has raised rates 17 times since June 2004, each in increments of one-quarter of a percentage point, to prevent inflation from taking off.
The hiring slowdown comes as companies cope with soaring energy prices and higher interest rates. Oil prices reached a new closing high of $77.03 a barrel in the middle of July, though they have moderated slightly since then.
In these conditions, businesses and consumers — engines of economic activity — have turned cautious. That, in turn, has slowed the economy.
Growth in the second half of this year is expected to stay subdued, at pace of about 2.5 percent to 3 percent, according to projections from some economists.
The economy slowed to a pace of 2.5 percent in the April-to-June quarter, compared with the 5.6 percent growth rate in the first three months of the year.
In July, manufacturers cut 15,000 jobs, reversing the gain of 22,000 the month before. Employment was flat in retailing, after the sector shed just over 4,000 jobs in June. Government employment also held in check in July, following a gain of 15,000 jobs the month earlier. Employment in the information industry, including publishing and telecommunications, dropped by 9,000.
The report showed that 17.3 weeks was the average time that the 7.2 million unemployed spent searching for work in July; the comparison for June was 16.2 weeks.
http://news.yahoo.com/s/ap/20060804/ap_on_bi_go_ec_fi/economy_14
Can't believe this isn't up yet.
So much for those rose colored glasses...
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Quote:
Originally posted by FellowTraveler:
Can't believe this isn't up yet.
So much for those rose colored glasses...
Interesting read FellowTraveler, but what are you trying to point out with this article?
De-lurking to stir stuff up.
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That this 'booming' economy has less bang for the buck than some believe...
Explosive Chrisisall
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Quote:
Originally posted by chrisisall:
That this 'booming' economy has less bang for the buck than some believe...
Oh I see, instead of an economic discussion this is simply another bash the present administration and it's supporters thread. Too bad, this could have been a stimulating topic.
De-lurking to stir stuff up.
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Quote:
Originally posted by BigDamnNobody:
instead of an economic discussion this is simply another bash the present administration and it's supporters thread.
Again???!
It's been done, BDN, please give it a rest, okay?
Look, I'm no fan, but it gets old, aiight?
Let's just explore the effects or causes or whatever. We can bash the admin. on plenty of other threads.
Tired Chrisisall
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Quote:
Originally posted by chrisisall:
Again???!
It's been done, BDN, please give it a rest, okay?
Look, I'm no fan, but it gets old, aiight?
Let's just explore the effects or causes or whatever. We can bash the admin. on plenty of other threads.
That is what I was attempting to do by asking FellowTraveler the point behind his/her post. My apologies if I was mistaken regarding your response. Perhaps, when you mentioned 'some people', you were simply refering to an aquaintance of yours in the energy sector who thinks the economy is booming.
What is your opinion on the causes or effects or whatever?
De-lurking to clear stuff up.
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Actually, I was referring to peeps around here that use the 'booming economy' point to underscore what a good job a certain President is doing.
The global economy (like global warming) is a fact of life, changing things all around us, regardless of who happens to be in office at the moment.
Other factors like war and such have a profound short-term effect, yes, but the leveling of the field will be felt by almost everyone in the coming decades, momentary highs and lows aside.
Now stop bashing Chrisisall
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Quote:You think your being clever but he is the reason we all have more money now! President Bush is saving us all financially and giving us the chance to save our souls. You want to laugh at him but I laugh at you! You want to be one with the Devil just keep on this path you idiot!
Originally posted by chrisisall:
Actually, I was referring to peeps around here that use the 'booming economy' point to underscore what a good job a certain President is doing.
The global economy (like global warming) is a ]
You CHOOSETO BE ONE!!!
PS.,its warming to get ready for where your headed l.o.l.
TheRightStuff1
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Quote:
Originally posted by TheRightStuff1:
You CHOOSETO BE ONE!!!
Are you calling me a 'Cheeto' and just spelling it badly?
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Oh - my - God.
'nuff said about TRS' post!
Economics YUM! One of my favorite topics! (Gets out the napkin and fork.)
For those of you too young to remember, stagflation is combination of the word stagnation (used to describe slowed economic growth and rising unemployment) and inflation (used to describe a general rise in prices). In theory, a stagnant economy and inflation are not supposed to exist together because an underemployed population "should" not be creating upward price pressure.
But in reality, stagflation was a HUGE problem under Nixon in the 70's (altho in my view Nixon was not the cause of the problem). This site details several possible explanations for stagflation. http://en.wikipedia.org/wiki/Stagflation
The existance of stagflation supposedly produces a conundrum for the Feds because solving one problem (tightening the money supply) worsens the other (recession).
I personally think there are several possible reasons for stagflation. The original (Keynesian) model assumed something of a closed economy. But exogenous demand- for oil as an example- can drive up prices in any national economy even as that economy is spiraling downwards.
It's also possible IMHO to create stagflation in a closed economy simply by poor money distribution. This is usually seen when deficit spending is pumped into a very narrow segment of the economy (a "war economy" for example) which significantly increases the money supply without increasing production of consumer goods. IMHO the stagflation of the '70's was caused by Vietnam War spending and exacerbated by Nixon (who resorted to wage/ price controls in a misguided attempt to solve the problem).
So while the Feds may wring their hands and look helpless about the problem, the solution is readily at hand... just fatally unpopular with the current administration and Congress. The solution is to end deficit spending and redirect money back into the larger economy. There are a lot of ways to do this, and one of the BEST ways is to raise the minimum wage (which hasn't been raised over 10 years).
Many conservative will say that raising the minimum wage depresses the economy, but the facts show oppositely: states (and nations) with higher minimum wages have more robust economies. Just to make sure that this isn't a self-slected population, time-series studies also show that economies improve AFTER an increase in the minimum wage... not before.
I'll provide the links again (I have them in another thread, but I'll have to hunt them down).
So.... I hope I didn't kill this thread. This is a passion of mine and I'd like some involved discussion.
"Divergers welcome!"
---------------------------------
Reality sucks. Especially when it contradicts our cherished ideas.
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