As US economy idles, not many jobs are getting added

Last Updated 15 November 2011, 14:51 IST

But with a ballooning European debt crisis sending ripples across the Atlantic and anxiety continuing over the tortured political landscape here, there is little indication that American employers will hire enough to put the millions of unemployed people back to work any time soon.

The Labour Department recently said that American employers added 103,000 net new jobs in September, indicating that the economy is at least not weakening and that businesses have weathered the oil price shocks and the Japanese disaster-related supply chain disruptions earlier this year.

The government also revised its estimates upward for the previous two months, suggesting that job growth in the summer was better than originally reported. Still, the Labour Department’s monthly snapshot captures the economic challenges as President Obama continues to press Congress to pass his jobs bill.

The economy is not growing fast enough to bring down the unemployment rate, which held steady at 9.1 per cent in September. Local governments and school districts are cutting large numbers of workers. And about a third of the jobs added by the private sector last month were actually 45,000 Verizon workers who had been on strike during August and were simply returning to work.

More than two years after the recovery officially began, 14 million people are searching for work, a little less than half of them for at least six months.

The employment numbers for last month were “certainly not consistent with recession,” said Joshua Shapiro, chief United States economist at MFR. But “it’s certainly not off to the races, and in absolute terms it is still very, very weak.”

The tepid jobs report provided more ammunition for Mr. Obama’s Republican rivals, who seized results as further evidence of what they say is the president’s ineffective stewardship of the economy.

Large-scale job losses might have offered Obama help in pressuring Congress on his jobs bill. Strong growth in employment would help counter criticism from Republican presidential candidates. But the so-so results merely add to his dilemma. “The president is offering only bad medicine — higher taxes, more spending, more dubious ‘green jobs’ boondoggles, and more tactical blame-gaming,” Representative Michele Bachmann of Minnesota said in a statement from her presidential campaign.

The rhetoric from Capitol Hill was equally critical. “Across the country, millions of people remain out of work, and uncertainty from Washington continues to freeze capital and prevent businesses small and large from hiring,” said Representative Eric Cantor of Virginia, the House majority leader.

In an interview, Gene Sperling, Obama’s chief economic adviser, said that critics of the jobs plan offered no viable alternative. “For anyone in Washington to look at an economy with 9.1 per cent unemployment and projections that growth will be too weak to even improve it to then argue that we should sit on our hands and just do nothing is simply inexcusable,” Sperling said.

Some recent data paint a slightly better picture of the economy.  Auto sales rose nearly 10 per cent in September to their highest level in five months, and sales at chain stores increased last month, led by luxury purchases.

Still, the housing market is teetering and the number of people filing weekly for unemployment insurance remains high. The average length of unemployment rose to 40.5 weeks last month.

Including those who are working part time because they cannot find full-time employment and those who are too discouraged to look for work anymore, the total unemployment rate rose to 16.5 per cent last month.

Some economists worried that the headline on the September jobs report was not galvanizing enough for the president’s agenda. “Policy is running out of ammunition and the willingness here, particularly with today’s number, may be even less to do anything dramatic,” said Torsten Slok, chief international economist at Deutsche Bank.

“The optimists could argue that now we don’t need any more support because we have at least some evidence that the economy is not falling apart completely,” Slok continued.
The markets were underwhelmed by Friday’s report. The Standard & Poor’s 500-stock index eased down less than 1 percent to 1,115.46, and the Dow Jones industrial average ended the day basically flat.

As has been the case throughout most of the weak recovery, health care was one of the strongest sectors, along with professional and business services.

Manufacturing, which had shown job growth for more than a year, lost 13,000 jobs in

The weakest results were in the public sector, with local government shedding 35,000 jobs, 24,400 of them in public education. Randi Weingarten, president of the American Federation of Teachers, said that about 277,000 education jobs had been lost since 2008 and projected as many as 280,000 more job losses in the next year from state and local budget cuts.

In Broward County, Fla., where the school district let go or did not renew the contracts of more than 1,000 teachers last May, Cherine Akbari, an 11th-grade American history teacher who was let go, has been steadily applying for jobs. Akbari, 28, is collecting about $1,000 a month in unemployment benefits, not enough to cover her monthly mortgage payment. In a twist of bad timing, she moved into her townhouse — bought out of foreclosure — just five days before receiving her layoff notice.

“Luckily I had some money saved up, but with the unemployment and my bills, I’m losing a little money each month,” said  Akbari, who has been applying for jobs in public relations and advertising. She has yet to receive an offer, she said.

Other precursors of future hiring, like temporary employment, showed modest improvement last month. Temporary help services added 19,400 jobs.
The average weekly hours worked, which tend to climb before companies start hiring again, rose slightly, as did average weekly earnings.

Allen L Sinai, chief global economist at Decision Economics, a consulting firm, said he supported the president’s jobs plan and estimated it could lead to 600,000 new jobs. Other economists have said it could create as many as 1.9 million jobs.

Right now, even profitable companies are reluctant to hire in Sinai’s view. “CEO’s are paid to grow shareholder value,” he said. “They are not paid to hire people if demand isn’t there and if they can substitute machines for people. That’s a no-brainer for the people who run companies.”

(Published 15 November 2011, 14:51 IST)

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