Posted on Tuesday, December 7, 2010
NEW YORK -- The American unemployment rate rose to 9.8 percent in November and the economy added a paltry 39,000 net jobs, the government reported this morning, dealing a substantial blow to hopes that better fortunes are taking shape.
Many economists had been expecting to see the number of jobs rise by about 150,000, amid recent talk that a real and sustainable recovery is finally underway, following the most punishing economic downturn since the Great Depression.
But the disappointing monthly snapshot of the nation's job market released by the Labor Department chastened such views, underscoring the enormous strains still weighing on the economy, leaving 15 million Americans still officially out of work.
"It's almost dead in the water," said Dean Baker, co-director of the Center for Economic Policy Research in Washington. "There's no sector showing good job growth right now. You really can't find anything good in this report."
Hopes had been buoyed by stronger-than-expected retail sales in recent weeks and crowds thronging shopping malls as the holiday season kicked off. Many economists took this as a sign that consumers -- whose spending amounts to some 70 percent of the nation's economic activity -- were at least feeling confident enough that the worst days were firmly over and were again in an acquisitive mode.
Increasingly exuberant consumer spending was supposed to indicate a loosening of money throughout the economy, one that would prompt American businesses to add more workers lest they miss out on opportunities for expansion. Fresh paychecks would then circulate through the economy and encourage more hiring.
But the jobs report for November landed like a rebuke of that scenario. The crowds after Thanksgiving now look like a bargain-hungry lot eager to take advantage of sales to complete their holiday shopping at sharply discounted prices, and then go home to resume figuring out how to pay the bills.
In what seems a sign that the retail industry itself does not believe the hyperventilating headlines suggesting a shopping renaissance, the sector lost 28,000 net jobs in November, according to the report.
None of this is all that complicated: People cannot buy things without money in their wallets (particularly as many wallets now sport credit cards carrying hefty balances at crippling rates of interest.) The old era, a time of collective fantasy that permanently rising real estate values would enrich the nation like a magical spring, is now history. Getting money increasingly requires having a job.
The latest monthly jobs report underscored the degree to which that status remains elusive for millions of Americans, as the unemployment rate ticked up from 9.6 percent in October.
The climb reflected a worsening of fortunes for most slices of the population. The jobless rate climbed to 10 percent for working age men (compared to 8.4 percent for women); to 13.2 percent among Hispanics, who have been hit particularly hit by the loss of construction jobs; and to 16 percent among black Americans, for whom the epidemic of joblessness has rolled back decades of steady progress.
The so-called underemployment rate -- which counts people who are working part-time for lack of full-time work and people who have given up looking for work because of a lack of jobs along with the officially unemployed -- remained at 17 percent in November.
Construction and manufacturing shed 5,000 and 13,000 jobs respectively. State and local government, whose finances are hemorrhaging, lost a net total of 13,000 jobs.
Some economists dismissed the monthly report as a momentary pause in a larger story of an economy still gathering force.
"The labor market recovery will continue in the months ahead, although invariably, as is the case with most data, there will be ebbs and flows within the trend," declared Joshua Shapiro, Chief United States Economist at MFR, Inc., a market research firm in New York, who has been skeptical of the talk of robust growth in consumer spending. "November was certainly something of an ebb, but is unlikely to prove to be anything more than that."
But by one key measure -- so-called final demand, which measures the economy's output minus the inventory of goods sitting on shelves -- the economy appears stalled. Growth in final demand is considered the best measure of what is really being purchased in the economy. Since late last year, final demand has been expanding at an anemic annualized rate just above one percent annually, according to government data. In the robust recoveries that followed recessions in the mid-1970s and early 1980s, final demand expanded by five and six percent annually.
Perhaps most disturbing is the lack of evidence that a fresh engine for economic growth is emerging to absorb those out of work.
The political system is busy arguing about how to take money out of the economy through an ill-conceived worship of austerity as the cure for the ailment at hand. Things are so bad that members of Congress have taken to pointing to Ireland, Greece and Spain as examples of the need to cut the American budget, when all three of those nations are prime examples of what happens when governments slam the brakes on spending in the midst of a downturn -- turmoil, fear, and the freezing up of the financial system.
In the latest sign of this wrong-headedness, Congress this week allowed emergency unemployment benefits to expire without extending them, putting some four million jobless people at risk of exhausting their weekly checks by February.
This is not only awful in terms of the immediate human costs, the prospect that more people will lose homes and skip meals for lack of a job, but also foolish economic policy. People who draw unemployment checks spend virtually all of that money on their own upkeep, distributing those dollars to local businesses and effectively supporting other people's jobs. Take that money away and spread the pain.
In a report released Thursday, the President's Council of Economic Advisers forecast that a failure to extend emergency unemployment benefits would eliminate another 593,000 jobs over the next year, while slowing economic expansion.
To which one cannot help but ask: If that's what the White House is seeing, then why so little apparent urgency from the Obama administration to create jobs? Why such little fight, such apparent acceptance of the impossibility of action in present-day Washington, as the evidence mounts that the economy is stuck in a deep hole?
There is no obvious way out of this hole, no rescue brigade on the way --and now, a halt to the scraps tossed down the shaft for the people who have unfortunately been stuck down there for too long.
Peter S. Goodman Huffington Post