Unemployment Stays at 9.5%

August 6th, 2010 at 11:18 am | 19 Comments |

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The latest numbers shows that the unemployment rate is unchanged at 9.5%:

The US economy shed another 131,000 jobs in July, the second month in a row that jobs have been lost, the Labor Department has said.

The private sector created 71,000 jobs, the government said. However, both figures were worse than expected.

Despite the overall fall in job numbers, the unemployment rate was unchanged at 9.5%.

Many analysts are concerned that high unemployment is undermining the US economic recovery.

The latest figures were hit by the 143,000 temporary employees taken on to compile the US census who finished their work in July.

In June, 225,000 census workers left employment. It was the first month that jobs across the whole economy had been lost on a month-on-month basis since October last year.

Although the impact of the census explains the job losses, the July figures will fuel fears that the US economy is struggling to recover, particularly as the monthly jobs report is one of the most closely-watched economic indicators in the US.

This is because private sector hiring remains weak. Manufacturing employment increased by 36,000, healthcare by 27,000 and mining by 7,000.

“The modest gain in private sector jobs confirm that the economy remains on a slow growth path, and it’s going to be a long haul to rev up the jobs machine,” said Bart van Ark from research firm The Conference Board.

“The current pace of employment is too slow to replace the more than eight million jobs lost in the recession – not in the next year or two, perhaps even not in the next five years.”

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19 Comments so far ↓

  • Jim_M

    From the article. (BBC)

    “Many analysts are concerned that high unemployment is undermining the US economic recovery.”

    LOL. Recovery?! Where is this recovery?

    Oh, of course, their right next to the 3.5 million jobs He saved or created. Thank goodness…got a little concerned there.

  • sinz54

    Unemployment is actually a lagging indicator of economic performance.

    In 1982, the second Reagan year, unemployment remained high at around 9.7% (comparable to where we are now). But the stock market had begun to soar upward, suggesting that investors were betting on a strong economic recovery. Which became more apparent in the next two years, as unemployment declined.

    Unfortunately, that hasn’t happened this time. There has been no soaring stock market. So Wall Street isn’t betting on a strong recovery either.

  • Rabiner

    Sinz54 is correct about employment as a lagging indicator. Also in 1982 the world economy wasn’t as fragile as it seems today. The EU wasn’t around and at risk of imploding like people feared after Greece defaulted or was about to default. I’m sure some of these international issues are prolonging the recovery as it spooks investor confidence greatly.

  • Jim_M

    Yes. Employment numbers are a lagging indicator. But who remembers a lag with legs like this?

    The U.S. is due for one he!! of a attitude adjustment.

    My gut says it coming Tuesday, November 2 2010.

  • bamboozer

    Yes, November. No doubt we’ll tax cut our way out of debt and recession both.

  • Jim_M

    Like I say we need A LOT more taxpayers. Not MORE taxes. Our energy needs alone can provide millions with permanent high paying jobs. Oil, Natural Gas, Clean Diesel, Oil Shale and Sands. Not to mention the most important of all, clean Nuclear Energy. The fact that the U.S. is NOT using cheap clean Nuclear Energy to power its cities is sick. Unbelievably inefficient.

    But unbridled expansion of government has to end first. November CAN’T get here soon enough

  • easton

    “Unfortunately, that hasn’t happened this time. There has been no soaring stock market.”

    Good lord, um…On March 9th 2009 the Stock market ended at 6,547.05, its lowest point since April 15, 1997. The stock market closed today at 10,653.

    In April of 1981 under Reagan it was 1024, In August of 1982 it went all the way down to 776.

    Ain’t reality, you know, real honest to God reality a bitch?

    The market plummeted under Reagan and it was a stock market roar, it went way up under Obama (we are talking about nearly identical time frames), it went way up under Obama but that means it was a bull market? Um…sure. Nice little fantasy world you constructed there Sinz.
    Really, just make up history, it is not like google has not been invented (oh wait, it has and it took me, oh, about 1 minute to utterly refute what Sinz said)

  • Jim_M

    The Mistake of 08′ couldn’t carry Ronnie’s jock.

  • jquintana

    easton // Aug 6, 2010 at 10:15 pm

    “Good lord, um…On March 9th 2009 the Stock market ended at 6,547.05, its lowest point since April 15, 1997. The stock market closed today at 10,653. In April of 1981 under Reagan it was 1024, In August of 1982 it went all the way down to 776.”

    The answer to what’s happening in the markets now, compared to the early 80s, is a lot more complicated.

    We’re still in a bubble economy because of fiscal policy, and interest rates have been driven so artificially low by the Fed that there is no possible way to gain a decent return on any investment outside the stock market. For example, most of the 82% of Americans who still have full time jobs are throwing cash into their retirement accounts, and fund managers who are flush with cash are taking that money and snapping up the major indexes because they are literally the safest thing to buy right now. The gold boom has come and gone, the housing market is shredded, 1 year CD rates are at less than 1.5%, the bond market is dead, etc etc etc…where else are you going to put your money?

    The reality is this: the current stock market rally is based on two things: 1) momentum investing, with investors using the “greater fool” theory of investment, and 2) technical analysis. With momentum investing, as long as the market keeps going up, investors will keep chasing the highs with the understanding that there is always going to be some damn fool willing to buy into it higher than you. Here’s a link that explains it briefly and quite well:
    http://en.wikipedia.org/wiki/Greater_fool_theory

    The technical analysis investors are placing bets on the market based on past data, using trend line analysis for finding bottoms (support levels) and tops (levels of resistance). They look at other past data such as moving averages, and place their automatic buy and sell orders based on this information.

    So, this current rally in the markets really has nothing to do with sound economic fundamentals, and is really driven by fear. The bulls are driven by the fear that they’re going to miss the next big rally, and the bears are driven by the fear that they’re going to have too much invested in the markets when the next big sell-off occurs. For the past several weeks, the bears have been winning the battle, but things could change very quickly for the worse in an environment like this.

    Back in 1980-81 we had the gold boom and many, many opportunities outside the stock market for a double-digit return because of high interest rates. At the same time, the stock market really wasn’t a popular place to go to put your retirement money until the 80s and 90s; back in the early 80s, the percentage of adults invested in the stock market was at its historic level of roughly 35%; now, it’s upwards of 60% or higher. Take into consideration that our workforce population is much higher now than it was in the early 80s, most companies have set up stock-based retirement portfolios for their employees, and the fact that most companies don’t offer pensions anymore, and you’ll see the reason why there’s been an avalanche of investment capital flowing into the stock market from the average person over the past couple of decades. In other words, it’s not just a rich man’s game anymore, and everyone is getting in on the game.

  • Jim_M

    To jquintana …..

    NICE!!!

  • easton

    jquintana, you are ignoring the literally hundreds of billions of dollars sitting on the sidelines. From Robert Reich

    “Many of America’s biggest companies are sitting on huge amounts of cash right now, companies in the Standard & Poor 500 stock index had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, and their earnings tripled. Why? Mainly because they’re global and selling into fast-growing markets in places like India, China, and Brazil.

    America’s biggest companies are also showing fat profits and productivity gains because they continue to slash payrolls and cut expenditures. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. Sounds terrific until you realize how it was done. By cutting 28,000 jobs – 32 percent of workforce – and slashed capital expenditures by 43 percent”. In other words a real improvement will show itself though strong top line growth from its US activities.

    According to Robert Reich “firms in the S&P 500 are now holding a whopping $932 billion in cash and short-term investments. And they can borrow money cheaply. Corporate bond sales are brisk. So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds.

    So nice little theory you got there, but it does not comport with the facts. The US stock market is international, many of our businesses are international, we can theoretically have a strong stock market and a weak domestic economy, as facts have shown out because of the international market. However, there are sound economic fundamentals for a multitude of companies, they are just making their money in Asia is all. Have you never heard of globalization?

  • easton

    jquintana, by the way, the percentage of people in the market was at an all time high under Bush, that still did not stop the market from collapsing.
    “1 year CD rates are at less than 1.5%, the bond market is dead, etc etc etc…where else are you going to put your money?” again, you seem to believe that the US is the only place in the world, you know people do invest abroad. I own homes in China and Mexico.
    My brothers brother in law owns a hotel in Thailand. There are 100,000 expats living year round in Shanghai alone. No, the reasons people are investing in the US market is because corporations are making money.

  • easton

    “where else are you going to put your money?”

    and of course people still in invest in their own housing, there is still the consumer market, vacations, and with the collapse of the housing market properties are cheap, if I had a ton of cash I would consider snapping up distressed properties and sitting on them for a few years. In the end people got to live somewhere, they won’t stay empty forever.
    And then you have additional savings options that we did not have years ago, such as HSA’s, Roth Ira’s, Children’s educational funds, etc. that even though the interest rate is very small, the profit is all tax free and completely safe if invested in cd’s. For the past 4 years I have only invested in these type of accounts personally, I have a work place stock investment but I pay that no mind because it is what it is, I have no control over it. These very safe boring investments eat up all my additional money but it is safe, the rest I use for summer vacation and splurges (have you taken a family of five to Disney park lately? yeesh.)

  • jquintana

    easton // Aug 7, 2010 at 9:13 am:

    “you are ignoring the literally hundreds of billions of dollars sitting on the sidelines.”

    Have you stopped to consider the reason for that? If we had a White House and a Congress that was pro-growth in the private sector and didn’t spend all their time on 1) expensive social programs that explode the national debt and crowd out private sector investment, and 2) constantly talk about raising capital gains taxes, individual taxes and corporate taxes, and 3) passing a near $1 trillion ‘stimulus’ package that is nothing more than a liberal Democrat wish list spending bill, those hundreds of billions of private equity (more like trillions) would free up and start flowing throughout the economy.

    “The US stock market is international, many of our businesses are international, we can theoretically have a strong stock market and a weak domestic economy.”

    Good point. We DO have a weak domestic economy, and yet another reason why a (relatively) strong stock market may not necessarily translate to a strong economy.

    You know what the markets like? Gridlock in the government so these damn fools we call elected officials can’t do anything to damage the economy further. Look at what happened after the Republicans took charge of Congress in 1995 with Clinton in the White House—probably the greatest peacetime economic boom in our nation’s history. And who do the liberals give credit for that? Clinton (lol). So, if you’re hoping for an economic recovery that Obama will surely take credit for, you’d better hope the Republicans take back (at least) the House this November.

  • jquintana

    Jim_M // Aug 7, 2010 at 8:59 am

    “To jquintana …..

    NICE!!!”

    Thanks :)

  • TerryF98

    Job losses under Bush 700,000 a month.

    Jobs gained during the Bush presidency and mainly GOP congress ZERO, yes ZERO.

    Policy changes the GOP propose to improve their dismal jobs record. NONE

    Sorry Tax Cuts for the Rich.

  • Jim_M

    TerryF98.

    For the love of Mike. At least try to be accurate.

    And please grasp the reality that America does not work for the poor.

    And to speak in your terms, by that I mean unceasingly looking to D.C. for solutions,
    the GOP is not in power. Hasn’t been in YEARS. Are you implying that if the GOP came up with policy ANYTIME in the last 3-1/2 years or for that matter tomorrow, that Nancy, Harry and BO would embrace it in any form? Naive, at least.

    When fiscal conservatism regains power (it will very soon) its policy will be to stand down. De-fund, deregulate and put this nation back to work. And it will.

  • easton

    Jim_M, Democrats were also not in power for 2 of those years, Bush was still the President if you don’t recall. How can you not say Bush was not President from 2006 to 2008. Need I remind you that Democrats controlled the House of Representatives for the entire 8 years of Saint Ronnie’s Presidency. And yes Republicans came up with policy. Tarp was rammed through Congress by the Bush White House, as was the AIG nationalization.

    And deregulate what? Glass steagal being repealed was one of the worst decisions of all time. How is it you don’t get that.

    Look, I am for sensible Conservative solutions, like favoring long term investments via a reduced capital gains tax, all the way down to zero. Year one tax capital gain the same as income, index it to inflation plus 2%, in 50 years no taxes whatsoever, but taxing short and long term the same is idiotic. It created the bust and boom cycle. People built houses, sold them at a profit, speculators came in, resold them, creating a frenzy, Banks packaged mortgages into securities and made a quick buck, not worrying if they lost because the government was insuring them, until the whole structure came down.

    Now are you saying we should get rid of the FDIC? That you want to return to the same structure that helped create the Great Depression, fine. Make that argument.

    And of course America works for the poor, it also works for the middle class, and the rich alike. Good lord have you ever heard of the common good? must it always be the code of the narcissistic selfishness?

  • easton

    jquintana, my original point was in rebuttal to Sinz laughable contention that the market surged during the same period of Reagan, and tanked under Obama when the reverse was true. As to the billions on the sidelines, there is a lot more than just the American market at stake here. You are aware, I imagine, of the debt crisis in Europe. Right now the US and Europe is treading water, it is far, far better than 2 years ago when we were in serious danger of drowning (all thanks to the policies you yourself are advocating)

    I am not averse to gridlock, however we had 2 years of that under Bush and the market cratered. The President submits the budget and does the heavy lifting. Clinton (and Papa Bush) had a very large hand in setting the table for the boom years of the 90′s by seriously reducing debt. I have no problem giving Papa Bush a heap of credit for that. But to state it was Gingrich, how is that possible? We were well into recovery at that point. And Gingrich (or Clinton) did not create the tech boom of those years. Lets not get silly. The Clinton and Bush tax increases did set our house in order, and so did free up capital for that boom, but it was also fortuitous that we had the virtuous cycle (as Greenspan termed it)

    And please, most of our debt is being financed by the Chinese and Asians, what crowding out are you talking about? It has been misallocation of investments into the housing bubble that screwed us up. It will take a few years for that mess to clear up. To blame it on Obama is just obscene. Blame it on Democrats and Republicans, fine, but not Obama, he did not repeal Glass Steagal.