Job Market Continues to Slump
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 Friday. 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 ANNUAL SLUMP
The June jobs report confirmed evidence of an unhappy long-term trend: Hiring is slumping for a third straight year. In each of the past three years, hopes for a job-market recovery were lifted by robust gains early in the year. But in each case, those hopes fizzled as hiring slowed by spring or summer.
The 80,000 jobs added last month marked a third straight month of weak hiring — an average of 75,000 jobs for the first quarter of 2012. That’s far too few to lower the unemployment rate.
The 2011 job slump lasted from May through August. Over that period, the average monthly job gain was 80,000.
In 2010, the slowdown, from June through September, consisted of four straight months of job losses. The average loss was 76,000.
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 157 points — about 1.2 percent — in early-afternoon 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 1.54 percent, from 1.59 percent on Thursday.
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.
FED TO THE RESCUE?
As job growth sputters, attention is turning to whether the Federal Reserve will try to give the economy another jolt.
Among economists, the conventional wisdom is that the Fed won’t act immediately and won’t act at all unless the economy takes a sharper turn for the worse.
The Fed’s options are complicated by the presidential election, just four months away. Some analysts have said the Fed may be reluctant to take action close to the election out of concern it could be seen as affecting the vote.
After the Fed’s last policy meeting, which ended with a decision to extend a bond-buying program, Chairman Ben Bernanke said, “If we’re not seeing a sustained improvement in the labor market, that would require additional action.”
The Fed’s next policy meeting begins July 31.
IT’S A MAN’S RECOVERY
Men bore the brunt of the recession: They lost about 70 percent of the jobs. But they’ve benefited the most during the weak recovery.
Three-quarters of the jobs created in the past 2 1/2 years have gone to men: roughly 2.7 million of the 3.8 million jobs.
Dean Baker, an economist at the Center for Economic Policy and Research, says huge job losses in male-dominated professions like manufacturing and construction have forced men to seek work elsewhere. As a result, they’ve taken many jobs that otherwise might have gone to women.
Men have landed 474,000 jobs in retail and 123,000 in finance, Baker calculates. By contrast, women have lost 49,000 retail jobs and 65,000 finance positions.
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.
STATES OF (RELATIVE) DISTRESS
Only 14 states have unemployment rates above the national average of 8.2 percent. But most of them have large populations.
Thirty-four states — more than two-thirds — have rates that are below the national average. 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.
‘WORLDLY 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.
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.
A BROADER GAUGE OF PAIN
The unemployment rate doesn’t fully capture the breadth of the jobs crisis.
A more inclusive measure is known as the “underemployment rate.” And it worsened again in June.
This measure includes not only the unemployed but also people who want jobs but have stopped looking for them and part-time workers who want full-time jobs.
The underemployment rate rose to 14.9 percent in June — up from 14.8 percent in May and 14.5 percent in April.
FISCAL CLIFF’ KEEPS EMPLOYERS ON EDGE
The job market could get even weaker once 2012 ends. Unless Congress intervenes by then, income tax cuts will expire and $100 billion in spending cuts will kick in. This would push the economy off a ” fiscal cliff” and land it in another recession, according to the Congressional Budget Office.
Jobs would become even scarcer.
A last-minute reprieve is likely, according to many political analysts. But until then, uncertainty is making employers reluctant to hire. More than three-fourths of the 32 economists surveyed by the AP last month described the fiscal cliff as a “major” risk.
CUSHIONING THE PAIN
When the job market and the economy weaken, energy prices tend to drop. That means relief for 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 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 held back by lower gas prices.
The construction industry added jobs for the first time in five months. The gain was small — 2,000 jobs — but it could rise in coming months because builders are breaking ground on more homes.
And spending on commercial construction is up. Manufacturers added jobs for a ninth straight month. 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 ahead.
That said, job growth will likely stay too weak to drive down unemployment significantly.
(Copyright 2012 by The Associated Press. All Rights Reserved.)