Unemployment rate and jobs report signal a long, slow recovery
The U.S. unemployment rate rose in April along with job creation, in a bit of statistical hocus pocus that’s not as baffling as it looks. But the phenomenon shows how hard it’s going to be for the unemployment rate to climb out of the deep hole dug by the great recession. The U.S. unemployment rate rose to 9.9 percent in April from 9.7 percent in March, according to the jobs report released by the Labor Department Friday. But the same jobs report said nonfarm payroll employment rose by 290,000 in April. How can the jobless rate rise at the same time jobs creation showed its biggest monthly total in four years?
Jobs report a sign of healing
The jobs report showed the U.S. unemployment rate rose along with jobs creation because of the improving economic outlook and a healing jobs market. The Associated Press reports that the jobless rate rose because 805,000 unemployed Americans who were so discouraged they had given up are starting to look for work and personal loans again. If the economy continues to pick up momentum, many economists predict that jobless claims could continue to rise along with jobs creation. Last month a total of 15.3 million people were still out of work. The number of people out of work six months or longer reached 6.7 million in April, a new high. These people made up 45.9 percent of all unemployed people, also a record high.
More unemployed seeking work
The rise in the unemployment rate in the jobs report Friday also contradicts a Labor Department report Thursday showing that first-time jobless claims fell by 7,000 last week, to 440,000. This is the third week in a row a decrease in jobless claims has been reported. The four-week average of jobless claims declined 4,750 to 458,500, the first decrease in five weeks — further evidence that things are looking up for people seeking work.
Wall Street distracted by panic
The improving jobs report may be good news for manufacturers, construction companies, retailers, professional and business services, education and health services. But a sector of the economy that doesn’t actually produce anything of value was unmoved. Wall Street fixated on Europe’s debt crisis, which appears to be resembling America’s own financial meltdown. Bad news in Europe sent traders into a panic Thursday. The Dow Jones industrial average plummeted almost 1,000 points and was wracked by spasms into Friday.
For job creation to start reducing the unemployment rate, economic growth needs to double its present rate. The Commerce Department said the economy expanded by 3.2 percent in the first quarter of 2010 — the third straight quarter of growth. The Associated Press reports that for the unemployment rate to fall, economists say the economy needs to grow at an annual rate of 6 percent to 8 percent a quarter. That rate of growth would require us all to go shopping. But nationwide average hourly earnings only increased by one penny in April from March to $22.47.