Jobless rate falls faster than many economists expected

By , Staff writer of The Christian Science Monitor

The politically important civilian unemployment rate dropped sharply in June to 7.1 percent, its lowest level in more than four years. And some private forecasters, who have been surprised at how quickly the jobless rate has fallen, now see the unemployment rate dropping below 7 percent by election day. The civilian jobless rate stood at 7.5 percent in May and has not been below 7 percent since April 1980.

''The unemployment rate will be below 7 percent by election day - perhaps substantially so,'' says Donald Straszheim, senior vice-president of Wharton Econometric Forecasting Associates. ''It is excellent news for the incumbent (President).''

While the jobless rate will fluctuate in the area of 7 percent in coming months, ''it is likely to edge down over the next six months,'' adds Sara Johnson, senior economist at Data Resources Inc., another forecasting firm.

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The sharp turnaround in unemployment is the result an economic recovery that ''just hasn't quit,'' despite a run-up in interest rates, says Sandra Shaber, senior economist with Chase Econometrics, a forecasting firm. Business investment has been particularly strong, she notes, as tax breaks for investments seem to be offsetting the dampening effects of higher interest rates.

Retail and auto sales have also remained robust. As a result, ''company after company in industry after industry is finding demand is holding up (or) is rising, and as a consequence they are adding people to payrolls,'' Mr. Straszheim says. Wharton had not expected the civilian jobless rate to hit 7.1 percent until December.

President Reagan was quick to claim credit for the upbeat unemployment numbers. His ''is the first single administration for more than 20 years that has reduced inflation and unemployment at the same time,'' the President said in a speech to the Texas Bar Association Friday. The jobless rate is now well below the 7.5 percent level that prevailed when Mr. Reagan took office.

Since peaking at 10.8 percent at the end of 1982, the civilian unemployment rate has fallen by 3.7 percentage points and the number of unemployed has dropped by nearly 4 million.

Democrats on Capitol Hill also hailed the reduced unemployment rate but noted that problems remain. For example, Sen. William Proxmire (D) of Wisconsin reminded a Friday Joint Economic Committee hearing that before adjustment for normal seasonal fluctuations ''the actual number of unemployed people increased last month'' by 428,000.

Janet Norwood, commissioner of the Bureau of Labor Statstics, agreed that the unadjusted jobless figure ''is the real world,'' but that to see trends seasonal adjustments are necessary. ''The trend suggests unemployment is clearly going down,'' she said. After seasonal adjustment the number of unemployed persons fell 385,000 in June to 8.1 million.

Rep. Parren Mitchell (D) of Maryland hailed the sharp decline in unemployment among black teen-agers. The rate fell from 44.1 in May to 34.3 percent in June. But the rate is still sharply higher than for white teen-agers, 15.5 percent of whom were jobless in June. Black adult men and women also experienced jobless rates sharpy higher than their white counterparts last month.

It is ''not a very rosy picture for this member of Congress, and I can't wax rhapsodic until it improves,'' said Representative Mitchell.

The national jobless rate of 7.1 percent obscures the wide variation in unemployment in the nation as a whole. Among the 10 large states for which June data are available, for instance, Massachusetts enjoyed a jobless rate of 3.9 percent while Michigan had an 11.6 percent unemployment rate and Ohio a 9.0 percent rate. Commissioner Norwood explained that ''the recovery is occurring differently in different industries. Massachusetts has a lot of high technology; Ohio has a lot of machinery. Those two industries are behaving very differently.''

Teen-agers and adult women enjoyed especially large reductions in jobless rates in June. The jobless rate for teen-agers dropped from 19.0 in May to 17.6 in June. In June 1.3 million teens found jobs. That is more than normally are hired and thus the seasonally adjusted unemployment rate fell. Confirming the reduction in black teen-age unemployment will require several months of data, Mrs. Norwood cautioned.

The jobless rate for adult women fell from 6.8 percent in May to 6.4 percent in June as more women than normal left the work force. A better economy perhaps means more women than usual are able to take the summer off, Mrs. Norwood said.

Economist warn that the jobless rate could start rising again if a slowdown in the economy appears in 1985 as many forecasters expect. ''Next year, after the election, we have some cause for concern,'' Mrs. Shaber says.

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