The U.S. economy has lost jobs for 23 consecutive months, but recent signs of improvement may indicate that the economic recovery will finally lead to job gains.
The U.S. Labor Department reported that the nation’s economy lost 11,000 non-farm jobs in November, which was the lowest jobs decline since December of 2007. The report also said that the national unemployment rate fell from 10.2 percent in October to 10.0 percent in November.
However, when reluctant part-time workers and people who have given up on the job market are included the national “underemployment rate” is at 17.2 percent, which is an improvement from 17.5 percent in October.
Other positive signs are: the average work week rose from 33 hours to 33.2 hours in November, average weekly earnings increased by $4.08 to $622.17, temporary help services added 52,000 jobs in November (the fourth consecutive increase) and the number of Americans filing for state unemployment benefits fell by a seasonally adjusted 5,000 to 457,000 in the week ending Nov. 28, the fewest initial claims since September of 2008.
But despite those signs of improvement, some economists say the unemployment rate will continue to rise next year.
“Job losses at only 11,000 was good news, but unemployment fell to 10 percent as much because folks left the labor force – throwing up their arms in frustration – as folks finding new work,” said Peter Morici, a University of Maryland business professor and former chief economist at the United States International Trade Commission. “I expect the unemployment rate to go up again unless more people quit the labor force or productivity growth falls to sub-par levels. Considering the drop in new unemployment claims, which still remain high but are falling, we should expect the bleeding to end by January or February, but thanks to labor force growth expect the unemployment rate to stay above 10 percent until stronger growth can be achieved.”
The persistent lack of job growth in the country has put pressure on the Obama administration. Obama recently held a jobs summit at the White House with business executives, economists and union leaders so administration officials could hear ideas for improving the economy and spurring job growth.
“While I believe that government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector,” Obama said at the jobs summit. “We don’t have enough public dollars to fill the hole of private dollars that was created as a consequence of the crisis. It is only when the private sector starts to reinvest again, only when our businesses start hiring again and people start spending again and families start seeing improvement in their own lives again that we’re going to have the kind of economy that we want. That’s the measure of a real economic recovery.”
Obama administration officials insist that the steps they have taken, including the $787 billion stimulus bill, have improved the economy.
“The Recovery Act has put us on the path to recovery, it pulled us back from the brink,” Vice President Joe Biden said at the jobs summit. “Before the president and I dropped our right hand on January the 20th of this year, already that month 700,000 people had lost their jobs; 740,000 by the end of that month lost their job; another 640,000 in the short month of February. So the fact of the matter is the last job report was not good, but a lot better. Our economy was shrinking when we took office at a rate of 6 percent, actually above 6 percent. And now it’s growing at a rate at about 3 percent the last quarter. And leading economists attribute a large portion of that GDP growth in the last quarter to the Recovery Act.”
The U.S. Commerce Department recently revised its estimate of the nation’s gross domestic product (GDP) for the third quarter to 2.8 percent from the initial estimate of 3.5 percent. It will be a while before the U.S. economy is consistently growing above 3 percent, Morici said.
“In a healthy economy, the labor force grows about one percent per year and productivity increases about 2 percent. Therefore, GDP growth must exceed 3 percent to bring down true unemployment,” he said. “Economists don’t expect that in 2010.”