The Job Report for June is looking up for the U.S.A. as news surfaced that 288,000 jobs were added to the employment sector- even though critics stated there is no promise it will lead to stable economic recovery. Jonathan House and Eric Morath of The Wall Street Journal reported the U.S. Labor Department announced on Thursday the national unemployment rate fell to 6.1 percent- a level not seen since September 2008. Yet, House and Morath reported these announcements do not “capture other weaknesses in the employment spectrum” even though the DOW Jones also reached new heights at a record of 17069.26 units prior to closing for the U.S. holiday of Independence Day.
House and Morath stated consumer spending is still weak and attributed this weakness to “skimpy wage growth,” a low economic output of business inventories possibly caused by severe weather, and the rise in people working in part-time jobs verses full-time ones. House and Morath also claimed that although workers’ wages have been growing annually by 2 percent, it is just enough to cover “inflation.”
House and Morath used an example of consumer spending weakness from William Blair analyst, Mark Miller. The example cited two kinds of Wal-Mart shoppers with different circumstances: low-income shoppers verses wealthier ones. Miller claimed low-income shoppers may still be dealing with losses pertaining to jobs and government benefits while wealthier shoppers may be benefiting from recovering housing prices and stock options. House and Morath concluded consumer spending may be lagging due to the types of jobs being added to the employment sector, which consisted mostly of retail, hospitality, and government employment jobs.
The June Report on jobs is looking up for the U.S. economy, but not promising full economic recovery. Neil Irwin of The New York Times stated in an opinion on “job numbers” that employers have indeed added about 2.5 million jobs over the past year. Irwin also noted the unemployment rate fell not because people stopped looking for work, but because 407,000 people had gained jobs since April. Irwin concluded, however, that the U.S. economy has seen this type of employment activity before citing data from January 2012 had revealed 360,000 jobs were added then, and that for the last three months, the average number of new jobs added each month has been around 272,000. Irwin added that the annual number of jobs added to the economy has relatively remained the same since 2012.
Irwin believes job numbers for July may “disappear,” as he cited schools closed late throughout the U.S. after a harsh winter, and seasonal jobs which are temporary may also end in June.
One must wonder why mixed reports are surfacing on how the June Job Report may be looking up for the U.S. economy, but is not promising signs of economic growth, particularly since the DOW Jones market reached record new heights. Some news sites have tried to find other, more revealing statistics to show which way the U.S. economy is headed.
Patti Domm of CNBC News reported job creation in June was nearly the same as in May, stating the consensus on non-farm payroll jobs was actually 215,000 versus 217,000 in May. Domm added that Mark Zandi, chief economist at Moody’s Analytics based out of New York, had stated the number of underlying job growth could actually be around 225,000, which would be seen as a major improvement over the past three years because this statistic would actually keep the national unemployment rate below 6.3 percent. Domm cited the market tends to concentrate on other factors, though, including “the number of discouraged workers and the participation rate.” Zandi added “wage growth” may also be a factor, but that small businesses had appeared to be doing well and were adding to the jobs gain too. Domm also concluded July reports may see job losses too.
In a separate report by CNBC News, the Associated Press (AP) was reported as stating most of the nine million jobs that were lost at the beginning of the “Great Recession” which started in December 2007 had been recovered by May. However, AP also reported 32 states still have fewer jobs than when the recession began. This is a contributing factor to slow economic recovery as states across the U.S. still face difficulty in establishing pre-recession employment. Some of these states included Illinois at 189,000 of jobs unrecovered, New Jersey – down 147,000 jobs, and Florida – down 170,000 jobs. Nevada and Arizona had “fared the worst” during the recession with unemployment rates reaching the double-digits, and these states hit hard from the housing crisis which contributed to the Great Recession.
While the June Job Report is looking up, but not promising full economic recovery, one has to look at why record new heights for the stock market is considered a contributing factor to U.S. economic performance as well. Kim Peterson of CBS News reported Americans simply do not care because most are not benefiting from such stock market performances.
Peterson stated only a fraction of Americans own stock, and those who do tend to be wealthier Americans. Peterson also included that only 15 percent of families directly owned stock as of 2010 which is down from 21.3 percent since 2001. Also, only 51 percent of “private-sector workers” access the market to invest, particularly for retirement, while according to a Pew Research survey taken last year, 53 percent of Americans do not invest in the market at all.
According to Peterson, those who invest in the stock market tend to make $75,000 or more in earnings, and have witnessed a surge over recent years. Therefore, wealthier people have recovered faster since the recession hit in 2007, with the AP reporting the top 5 percent making 24 times the median household earnings. The AP also reported this figure is up 16.5 percent since 2007. Peterson concluded economists’ views have appeared to be right, the gap between income equality is in-fact getting worse. Even with the Job Report looking up in June, outlook does not look promising.
By Liz Pimentel