Skip to comments.Unemployment rises, hundreds of thousands quit looking (UE rate drop since 2009 due to giving up)
Posted on 08/06/2012 10:00:53 AM PDT by xzins
The U.S. economy added 163,000 jobs in July. Although an improvement over the first quarter, the ranks of the unemployed swelled another 45,000.
...The unemployment rate rose to 8.3 percent even as 348,000 workers quit looking for work and were no longer counted in the official jobless tally.
In the weakest recovery since the Great Depression, nearly the entire reduction in unemployment since October 2009 has been accomplished through a significant drop in the percentage of adults participating in the labor force -- either working or looking for work.
Growth slowed to 1.5 percent in the second quarter as consumers pulled back and the trade deficit on oil and with China continued to drag on demand. The outlook for the second half of the year isn't much better. Car sales are stronger than a year ago but aren't likely to improve much further and housing prices have risen in recent months but on weak volumes.
The July jobs report indicates growth remains slow in the third quarter -- likely in the range of 2.5 percent.
Job gains were fairly evenly spread. Manufacturing added 24,000 jobs. Other big gainers included education, healthcare, professional services, leisure and hospitality, retail and wholesale trade and information and communications.
Construction lost 1,000 jobs and federal, state and local governments shed 9,000.
Gains in manufacturing production haven't instigated stronger improvements in employment largely because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.
Recent moves by China to further weaken its currency and to close its markets to stimulate its own flagging demand indicate matters will get worse without a substantive response from Washington.
Also, concerns about health insurance costs, once ObamaCare is fully implemented, are discouraging employers. Mandated services raise costs and regardless of their merits, make adding employees more expensive at a time of great stress for most businesses.
The financial crisis in Europe and mounting problems in China's economy worry U.S. businesses about a second major recession and discourage new hiring. The U.S. economy continues to expand at a torturously slow pace and is quite vulnerable to shock waves from crises in Europe and Asia.
Factoring in those discouraged adults and others working part time for lack of full time opportunities, the unemployment rate is 15 percent.
Prospects for substantially lowering the headline unemployment rate are slim because so many folks who left the labor force would likely return if economic conditions improved.
The economy would have to add about 13.3 million jobs over the next three years -- about 370,000 each month -- to bring unemployment down to 6 percent. Growth in the range of 4-5 percent is necessary to accomplish that.
Growth is weak and jobs are in jeopardy because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations and costly healthcare mandates don't address structural problems holding back dynamic growth and jobs creation -- the huge trade deficit and dysfunctional energy policies.
Oil and trade with China account for nearly the entire $600 billion trade deficit. Dollars sent abroad that don't return to purchase U.S. exports are lost purchasing power. Consequently, the U.S. economy is expanding at 2 percent a year instead of the 5 percent pace that is possible after emerging from a deep recession and with such high unemployment.
Without prompt efforts to produce more domestic oil, redress the trade imbalance with China, relax burdensome business regulations, and curb healthcare mandates and costs, the U.S. economy cannot grow and create enough jobs.
(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School, and a widely published columnist.)
this is about as concise a review, point by point, of how badly every sector of the economy is doing.
I’m surprised UPI printed it
Yep, and why we cannot continue on the course we are on. This is one reason of many I am voting for the RINO Mitt over the Marxist Obama.
There but for the grace of God go I.
wisdom is proved right by all her children.
One of my pet peeves ... saying that those who ran out of unemployment benefits have “given up”. BS ... they simply ran out of benefits, and consequentially are no longer counted as “unemployed”. In fact, most are still looking for employment. But thanks to Zero and his communist policies ... there are scant jobs to be had out there.
The Libtards will never wake up. It’s the Gvt. Stupid!
IMO the economy is not coming back for a long long while.
Particularly cubicle jobs are not coming back ... maybe never.
Make your own work/job. It will be the only way many can survive.
It’s a weird system, clamper. I remember back in about 1974 I collected unemployment for a couple months. I had to report to the UE office each month the places I had looked for work. I think it was a requirement for me to look in at least 3 places.
That was a long time ago, but I imagine everyone now saying to them, “I didn’t look anyplace this month.” gets dropped from the rolls for that month’s report.
Wrong. The unemployment insurance rolls and the Bureau of Labor Statistics' household survey are completely different counts.
You can be on unemployment but not count as unemployed according to the BLS. For example if you are in some approved training program and can't take a job immediately because you are in class, you could get unemployment payments but be out of the labor force according to the BLS.
You could be looking for a job and thus count as unemployed according to the BLS, but not be eligible for unemployment insurance. For example, you could have run out of benefits, just be out of school, be the owner of a failed company (and thus not get UI payments), have quit voluntarily or have been fired with cause.
The only linkage is that in most cases you have to be looking for a job to continue to get unemployment insurance payments, but I don't know how close they check anymore.
To be in the labor force according to the BLS, you have to have a job or have actively looked for one in the last four weeks. That means you have sent out a single resume, called a single employer or posted on a job placement site. Just looking at classifieds or on job sites isn't enough.
I'm surprised that he's from the University of Maryland.