Rising Unemployment Demonstrates Shallowness of America’s Recovery

Rising Unemployment Demonstrates Shallowness of America’s Recovery

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Weak economy continues to plod along.

The United States is supposed to be in the midst of an economic recovery, admittedly a very tepid one. However, for June 2011 the U.S. Labor Department reported that only 18,000 net jobs were added, while the national unemployment figure rose again and now sits at an official 9.2 percent. This is bad news for everyone as the economy has cleared stalled and is in need of a fix that will encourage companies to resume hiring and give consumers a reason to buy a car, refinance a home loan or take a vacation, stimulants this economy needs if it is to grow.

High Unemployment

As of publication, 14.1 million Americans are unemployed, but millions more are underemployed or have withdrawn from the job market, at least temporarily. Many more may have taken early retirement, faced with the grim reality that jobs won’t come back or at least at the level we’ve seen before the Great Recession hit.

Republicans and Democrats are blaming each other for the higher unemployment numbers. President Obama, reports Reuters, noted business unwillingness to hire for reasons he says has everything to do with the budget impasse. Said Obama, “The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised,” making his case for Republicans to settle its dispute with his administration.

Republicans cite the president’s earlier stimulus plan which they say was “misguided” while faulting increasing regulations and an “overwhelming national debt” with holding back the creation of private sector jobs.

Employment Numbers

None of this political wrangling is of much comfort for the unemployed, many of whom long ago expended their unemployment benefits and are trying to find work, start a new business, work as consultants or take on contracting responsibilities.

For June, the private sector added 57,000 new jobs, but that number was partially offset by 39,000 fewer government jobs, for a net increase of 18,000 jobs. Just to make room for new job entrants, the economy needs to add 125,000 to 150,000 jobs each month which is why the unemployment rate continues to tick upward even as new jobs are being added.

Political Price

For a sustained rebound, hundreds of thousands of new jobs need to be created monthly, perhaps more than 500,000 and over a year or more to bring unemployment below 8 percent. That 8 percent mark is what some analysts say is the magic number Obama needs to reach, otherwise his chances of being reelected against a yet to be named Republican candidate may be small.

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