Poor unemployment report points to troubled US economy
The US added 69,000 jobs in May, the Labor Department reported Friday – the third straight month of disappointing jobs numbers. The unemployment rate edged higher, to 8.2 percent.
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The White House scrambled to put a more positive spin on the numbers. Alan Krueger, chairman of the president's Council of Economic Advisers, noted that the problems in the job market “were long in the making and will not be solved overnight…. We are still fighting back from the worst economic crisis since the Great Depression.”Skip to next paragraph
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In a briefing for reporters, US Treasury official Jan Eberly cautioned against looking at one month of data. She said the economic recovery had to be looked at against the backdrop of the financial crisis.
“Households are still deleveraging,” or paying down debt, she noted. In addition, she observed that gasoline prices were still elevated in April and May, which may have held down some consumer spending.
Independent economists acknowledge being somewhat baffled by the May jobs report. For example, the report indicated that the construction trades lost 18,000 jobs in the month.
Ms. Eberly suggested it was related to the strong construction hiring in December and January, when the weather was warmer than normal. “There was some payback,” she said.
Some economists say the problems in Europe are causing businesses to become more cautious, as some European authorities try to figure out how to keep their countries' banks solvent. The issue with Greece remains unresolved, and now there are reports that the Spanish banks are taking huge losses on their real estate loans.
All the uncertainty causes business to pull back, agrees Joanie Ruge, chief employment analyst at Randstad, a large staffing organization.
“Business is being more cautious about hiring permanent staff,” she says. “Part of the problem is Europe, but there is also a lack of confidence in the US over whether economic conditions will be sustainable and what kind of policy changes may take place after the election.”
As business battens down the hatches, it is also starting to announce more layoffs.
Chicago-based outplacement company Challenger, Gray & Christmas on Thursday reported that announced job layoffs in May were 61,887, the most since last September, when they hit 115,730.