USA: Vanishing Jobs

The labor market hit a major speed bump on its road to recovery.

467,000 American jobs were lost in June, according to the Labor Department, far more than expected. 

Meantime, the unemployment rate inched up to 9-1/2 percent — the highest rate since August 1983.

There is very little in this report to smile about, warns Wachovia Chief Economist John Silvia.

[John Silvia, Chief Economist, Wachovia]:
„It is not that the jobs market is getting really worse, it is simply that at this point in the year, given the federal government stimulus program that’s already been put into place — given the amount of Fed ease — we seem to not be moving forward in the jobs market as much as people had come to expect.“

June’s labor force reduction brings the total number of jobs lost during the recession ever closer to 7 million. A fact not lost on the White House, which has pinned its hopes on the President’s economic stimulus plan.

[Hilda Solis, U.S. Labor Secretary]:
„At the current time this is not acceptable and we are going to do everything in our power to make sure that the American public comes back strong. And I know that, and the people that I talk to out in the field – every average day people – that they are very hopeful that this administration will do the right thing, and we are.“

But strong is not the way analysts expect the economy to bounce back. With more discouraged workers dropping out of the labor force last month and average hourly earnings flat for the second time in three months, economists say consumers are likely to remain worried about their jobs — resulting in more cautious spending.

And that has put Wall Street on edge. Stocks are falling sharply in response.

(NTDTV)