Outlook for unemployment rate in US
Washington — President Reagan's efforts to woo blue-collar voters to the GOP camp were jolted last month when it was announced that civilian unemployment in July jumped 0.4 percent, to 7.5 percent. It was the first uptick in the jobless figures in 20 months.
When August's unemployment figures are announced on Friday, economists say they expect them to show joblessness once again heading down. And the politically sensitive statistic is expected to keep dropping for the remainder of 1984, although month-to-month reductions are likely to be less pronounced than earlier in the year.
The rise in unemployment reported in July was a statistical fluke, experts argue.
''It was just a blip'' in one of the surveys used to calculate the jobless figure, says Robert Gough, senior vice-president of Data Resources Inc., a major forecasting company. DRI expects the August unemployment rate to be 7.2 or 7.3 percent.
But a number of major forecasters now say that due to weaker-than-expected economic growth, unemployment will fall less rapidly late this year and early in 1985 than anticipated. And some experts say they see unemployment rising again in '85.
If these forecasters are correct and the jobless rate climbs in the middle of 1985, the key reason will be that ''we will have a distinct slowing in (economic growth) around then,'' says Bernard Markstein III, senior economist at Chase Econometrics, a forecasting company.
While the unemployment rate may bounce around in a given year, over the remainder of this decade and into the 1990s the US could experience a significant reduction in unemployment due to fundamental changes in the economy, some experts assert.
''What we are seeing is the readjustment of the labor market to a period of sustained growth and the increased competitive strength of the American economy, '' says David Lewin, a professor at the Columbia University Graduate School of Business.
In addition to jobs created by a more competitive economy, the jobless rate could inch down because more workers are electing to retire earlier and fewer new workers are entering the labor force.
''Over the next one to 10 years, I would expect to see a progressively lower national unemployment rate,'' Dr. Lewin says. A 5 percent jobless level is possible in the longer term, he contends.
Projections by Chase Econometrics also show the jobless rate nearing 5 percent in the early 1990s, says Mr. Markstein. The civilian unemployment rate has not dipped below 5 percent since 1973, when it was 4.9 percent.
Although in the long term the unemployment situation may improve, in the short term, economists are lowering their sights.
Roughly one third of the 46 major economists surveyed each month by Blue Chip Economic Indicators, a Sedona, Ariz., newsletter, changed their 1984 unemployment forecasts in late August to show less improvement. And about a quarter of the forecasters Blue Chip editor Robert Eggert talked to last month had recently raised their forecasts for unemployment in 1985.
Some economists actually say they see the jobless rate heading back up next year, as a new presidential term begins. The uptick could come as soon as the second or third quarter of 1985.
For example, Chase Econometrics sees unemployment bottoming out at 6.9 percent in the first and second quarter of 1985 and then heading up to 7.1 percent in the third quarter.
DRI sees unemployment dipping to an average of 6.9 percent in the first quarter of 1985 and then climbing steadily to 7.5 percent by year's end.
These forecasts of rising joblessness next year are not universally shared. The Reagan administration, for example, sees unemployment falling steadily through 1989, to 5.7 percent in 1989.
While most private forecasters are not that optimistic, the more bullish among them do not expect an upturn in joblessness until 1985. Wharton Econometric Forecasting Associates, for instance, sees unemployment falling through the final quarter of 1984, to 6.2 percent, before climbing in 1985.
''As long as the economy continues to expand at a fairly healthy pace, the unemployment rate should continue to decline,'' says Wharton senior economist Robert Wescott.
The firm expects the economy to grow 3.8 percent next year, after adjustment for inflation. As a general rule, the economy must grow at a 2.5 to 3 percent annual rate to keep unemployment from rising.
If the unemployment rate follows Wharton's scenario, or one more pessimistic, it would continue a recent trend: Each time unemployment bottoms out, it does so at a point above the previous low, thus leaving increasing numbers of Americans looking for work. In 1979, for instance, the average unemployment rate for the year reached 5.8 percent before heading up again.
Experts cite a variety of reasons why the jobless rate has tended to creep upward.
Major factors include an influx of women and young people into the work force , technological advances that render some job skills obsolete, and recent increases in business efficiency, so that fewer workers can produce more goods.
A 7.0 percent unemployment rate today, however, may not represent quite as much hardship as the same rate 20 years ago, due to the increasing number of families with two wage earners.
And if Columbia's Professor Lewin is correct, the US could ''see the ratchet go the other way'' in coming years, he says.