There’s bad economic news for the nation and, in political terms, for the Obama administration: new statistics indicate the job market has worsened and that the stimulus package isn’t doing anything yet on the labor front:
Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.
Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will restrain growth.
“This will be another jobless recovery,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. “We may get positive economic growth driven largely by federal spending, but people on the street will say, ‘Where are the jobs?’”
Economists said a decline of 322,000 jobs in May had raised expectations that the market was bottoming out as the economy struggled to right itself, but the numbers on Friday dashed some of those hopes.
The figures also raised questions about whether the Obama administration, which has already passed a $787 billion stimulus plan, needed to step in again to shore up the American worker.
“The stimulus has probably stabilized income, but it has not moved the economy forward,” said John E. Silvia, chief economist at Wachovia Corporation. “It’s a finger in the dike. But in terms of getting the economy going, there’s no evidence of that yet.”
The latest figures highlight a somber new reality for workers, economists said. The numbers were released a day early because of the Fourth of July holiday.
One political impact: more than ever it will be increasingly difficult for President Barack Obama and the Democrats to point the finger at the previous administration. It will have the same hallow, CYA ring that the Bush administration’s claims during many parts of its tenure than when the outlook good it was due to the Bush adminsitration but if there were some economic problems it was due to the “Clinton recesssion.”
Partisans of both parties try to play this kind of game but the bottom line is that Obama is putting his economic plan into place and he’ll be judged on whether his solutions prove to actually be solutions or not. The pressures and stakes will be even higher now on Obama and the Democrats due to the Democrats’ control of Congress.
NBC’s Chuck Todd, Mark Murray, Domenico Montanaro, and Ali Weinberg:
Right before the long July 4th weekend, the Bureau of Labor Statistics reported this morning that the U.S. economy lost 467,000 jobs in June, and that the unemployment rate is now 9.5%, a 26-year high. Expect Republicans — once again — to pounce on these numbers and question the stimulus (but they’re also forgetting that the economy lost 3.1 million jobs in Bush’s last year in office; in Obama’s first five months, the total loss has been 1.9 million). Not surprisingly, of course, Obama will today talk about jobs, innovation, and the economy at 2:20 pm ET. These remarks will follow a closed-press meeting with business leaders. Later in the afternoon, the president departs to Camp David to begin his July 4th holiday.
UPDATE: How bad is this? This bad:
Heidi Shierholz, an economist with the Economic Policy Institute, said that the loss of 6.5 million jobs since the start of the recession combined with the growth of the workforce means that the gains of the previous business cycle have been completely blown away.
“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle, a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000-2007,” said Shierholz in a statement.
The ranks of the long-term unemployed — people out of work for 27 weeks or more — grew by 433,000 in June to a total of 4.4 million. Three in 10 workers are now long-term unemployed. The collapse of the housing industry contributes to their plight.
“We know right now because of the housing crisis that people can’t move to find another job,” Shierholz said. “People that in previous recessions may have been able to relocate to find another job can’t now.”
The Huffington Post has been profiling people who’ve been out of work for long periods of time. Marvin Bohn of Ohio hasn’t worked for a year and has been paying for his meds out-of-pocket. Steve Dittmann of Kansas said of the unemployed life, “I feel like I’m on the other side of a Plexiglass wall looking in.”
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.