Unemployment Sucks ... Everywhere ... So Do the World's Economies, Including Ours

U.S, Jobs Growth Slowed Sharply in May discusses this morning's dismal U.S. unemployment report:

"U.S. job growth slowed sharply in May, the latest indication that the economy has lost momentum.

Nonfarm payrolls grew by a 69,000 last month, the Labor Department said Friday, the smallest gain in a year. The unemployment rate, obtained by a separate survey of U.S. households, ticked one-tenth of a percentage point higher to 8.2%, the first increase in nearly a year.


Economists surveyed by Dow Jones Newswires expected a gain of 155,000 in payrolls and for the jobless rate to remain at 8.1% in May.

Compounding an already weak report, March and April payroll gains were revised down. Nonfarm payrolls increased by 77,000 in April, compared with the previously reported 115,000, and March payrolls grew by 143,000 versus a previously reported 154,000.

The unemployment rate has fallen sharply since August, when it was 9.1%. But even though companies are hiring, the pace of job creation remains well below figures at the start of the year—the economy added an average of 226,000 jobs a month in the first quarter.

Nearly three years after the recession ended, the economy has failed to gain traction amid broad uncertainty related to Europe's debt crisis, the potential for steep U.S. tax increases and spending cuts next year, and signs of slower growth in developing countries.

Federal Reserve officials have said they expect only gradual improvement in the U.S. labor market the rest of this year. The Fed is forecasting an unemployment rate somewhere between 7.8% and 8.0% by the end of 2012.

If the labor market stalls, the Fed could reconsider measures to stimulate the economy.
A $400 billion Fed bond-buying program, meant to reduce long-term interest rates, ends this month.

Friday's report may worry some Fed officials and likely ensures that the central bank won't veer from its plan to keep short-term rates low until late 2014.

Employment increased in health care, transportation and warehousing, wholesale trade and manufacturing.

The construction industry lost 28,000 jobs.

Average wages inched ahead by two cents to $23.41 an hour, while the workweek slid by 0.1 hour to 34.4 hours.

A broader measure of unemployment—which includes job seekers as well as those in part-time jobs—rose to 14.8% in May from 14.5% in April."

Summing Up

We'll provide our take on this dismal employment report and its broader meaning in a subsequent post.

Suffice it to say things continue to be bad, and there's no end in sight to the sluggish economy and its effects on U.S. households.

We're probably not headed back into another recession, but we'll definitely be in a slow to no motion mode for the foreseeable future.

The potential "good news" in the bad news may be that our "public servants," all of them and on both sides of the aisle will finally exit the denial stage and come to grips with what really is preventing us from getting things moving again.

In my view, that's too much debt caused by unpaid for government spending and redistribution programs, as well as too little private sector growth.

Stay tuned.

Thanks. Bob.