Friday, June 04, 2010

Unemployment Figures Show Serious Troubles Remain For US Economy

While most economists consider the unemployment rates to be a lagging indicator of economic vitality, today's government figures show that the economy is in serious trouble.

There's no other way to spin it. Economists had been expecting that more than 500,000 jobs would be created for May. The number was 431,000. If that wasn't bad enough, nearly all of those jobs were temporary census jobs, meaning that there was no growth in the private sector. The economy has to grow by hundreds of thousands of jobs each month just to continue at the ongoing moribund level.
US employers added 431,000 jobs to nonfarm payrolls in May, but 411,000 of those were temporary census workers. The private sector added just 41,000 jobs: Manufacturing, temporary help and mining added jobs, while construction declined. That number was also well short of the more than 500,000 economists had expected. The unemployment rate, however, fell to 9.7 percent from 9.9 percent in April.

"This number is extremely disappointing," said Todd Schoenberger, managing director at LandColt trading. However, he said, it should come as no surprise. "Considering first time jobless claims have been inching higher over the past four weeks ... and GDP came in at a lackluster 3%, American companies are going to be reluctant to hire."
Unemployment rates wont be coming down anytime soon.

CNN posts this all as rosy news, reporting that the 431,000 jobs marks the largest increase in 10 years. Considering that these are temporary jobs, once the census is completed, all those jobs disappear. They aren't permanent jobs.

The spin is furious over how to show that the economy is improving despite paltry employment figures, but with a bad labor market, businesses aren't going to hire, they aren't going to expand, and the ongoing mess in the real estate sector isn't going to improve because people will not be in a position to buy or sell homes or remodel.

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