Lack of jobs stall economic growth

(AFP)

U.S. jobs growth ground to a near halt in June as employers hired the fewest workers in nine months, frustrating hopes the economy would bounce back quickly from a slowdown in the first half of the year.

Nonfarm payrolls rose only 18,000, the Labor Department said on Friday. It was the weakest reading since September and below even the most pessimistic forecast in a Reuters poll of economists.

The dismal report, which showed the unemployment rate climbing to a six-month high of 9.2 percent, stood in stark contrast with recent data on manufacturing and retail sales that had shown activity starting to perk up.

“This report has dashed hopes that the economy was about to accelerate again,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “It is showing a much bleaker picture than other indicators and we must hope that it is overstating the extent of the slowdown.”

Investors, who had positioned for a fairly strong number after a bullish reading on private hiring from payrolls processor ADP, took a dim view of the report and sold U.S. stocks. Global equities retreated from five-week highs and oil prices slumped.

But prices for Treasury debt rallied on views the Federal Reserve would keep overnight interest rates near zero well into next year. The dollar rose against a broad basket of currencies as investors turned risk averse.

Adding to the weak tenor of the report, the department said the economy created 44,000 fewer jobs in April and May than previously thought.

GOVERNMENT BLEEDS JOBS

Government was the biggest drag in June, but the weakness was widespread and could pressure the Fed to consider further action to help the economy. Officials, however, have set a high bar after completing a $600 billion bond-buying program last week.

Still, economists are holding to their belief that the economy will soon pull away from its first-half soft patch and do not see a new recession on the horizon.

Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania, noted that other recent data has been more positive. “We haven’t seen the economy faltering further, instead we have seen the economy coming back,” he said.

Motor vehicle manufacturers are ramping up production as a shortage of parts from Japan eases and retailers reported better-than-expected sales in June. In addition, gasoline prices have dropped 38 cents from their lofty levels in May, which should bolster consumer spending.

The employment data dealt a blow to the Obama administration, which has struggled to get the economy to absorb the 14.1 million unemployed Americans. The economy is the top concern among voters and will feature prominently in President Barack Obama’s bid for re-election next year.

Two years after the recession ended, employment is still nearly 7 million jobs below its January 2008 peak. At the employment growth pace of the last three months, it would take nearly seven years to replace the lost jobs.

The data could stiffen the resolve of Democrats to push for near-term stimulus as they seek a deal with Republicans to cut the U.S. budget deficit.

In an appearance at the White House, Obama said an impasse in budget negotiations that is blocking a needed increase in the nation’s debt limit had contributed to the reluctance by businesses to hire.

“The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised,” he said.

Republicans pointed the blame at Democrats.

“Today’s report is more evidence that the misguided ‘stimulus’ spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country,” House of Representatives Speaker John Boehner said in a statement.

WORKWEEK SHRINKS, EARNINGS WEAK

The private sector added 57,000 jobs last month, while government employment shrank 39,000 — the eighth straight monthly decline — as local and state governments continued to wield a budget ax.

Factory payrolls rebounded 6,000 after contracting in May for the first time in seven months, reflecting a step-up in motor vehicle production. Construction employment fell 9,000 last month after declining 4,000 in May.

The length of the average workweek fell to 34.3 hours from 34.4 hours. Employers have been reluctant to extend hours because of the uncertainty surrounding the recovery and the decline suggested they were facing little pressure to increase hiring soon.

Temporary help, another leading indicator of future hiring, fell for a third straight month.

Average hourly earnings slipped a penny, the first decline since November and more evidence that wage-driven inflation is not a risk. Over the past year, earnings have risen only 1.9 percent.

19 Responses to "Lack of jobs stall economic growth"

  1. Sandune  July 9, 2011 at 11:28 am

    Why not drop the minimum wage amount? There is no way I could have paid more than $5 an hour in my store. I used the building to show art exhibits from the local residents and would often allow them to show their art in the building if they would fill in for me during emergencies.

    Until we start up some manufacturing and/or service jobs in America, we will never break even the way our treaties on trade exist. I listen to a lot of news on the radio and Ross Perot is again being discussed as a great authority on deficits. Too late, folks, when we had Perot on the ballot most of you didn’t like the way he looked or sounded.

    I’ve given up on American voters.

    • Eddie Caplan  July 9, 2011 at 1:27 pm

      Maybe your business model wasn’t any good.

      Do you really think you should pay somebody $5/hr in today’s world? That’s ~$10,000/year ($866/mo). How much is rent in your world? $100/month? A month’s supply of groceries? $200?

    • Carl Nemo  July 9, 2011 at 2:06 pm

      I’d be ashamed paying someone $5.00 per hour not even kids. When people do work on my place I either pay them by the job or the hour, but it’s just compensation. If you can only afford to pay such low wages, then go out of business or do the work yourself. Contractors in my area figure $50 per hour per man/woman if they are involved with labor intensive projects along with the use of their equipment.

      The problems facing this nation aren’t linked to the minimum wage, but to the blue sky ‘pirate capitalism that’s been engaged with the start of the Reagan/H.W. Bush era and beyond. Workers wages have increased 23% since 1979 to 2007 whereas the upper 1% representing the greedy ‘movers and shakers’ that have engineered our national demise increased 300% for the same period per the Bureau of Labor and Statistics.

      More than 90% of all countries have a minimum wage law. As of 2010 the minimum wage in Australia is $15 per hour and their country is doing quite well compared to ours. The Aussie dollar as of today is 1.0773 agasint the USD, meaning almost 8 cents more. It’s also an excellent currency hedge in the FOREX market via the Rydex family of currency funds, symbol FXA and pays 4.25% interest on your holdings. I have no vested interest in Rydex funds other than my personal holdings in the Aussie dollar as an inflation hedge against USD inflation. You can take a position via your broker as well as in other currencies.

      In summation the entire minimum wage discussion on the part of our ‘leaders’ is nothing but a canard to distract us from their criminally disposed profligacy with our tax revenues.

      http://en.wikipedia.org/wiki/Minimum_wage_law

      The solution to our national travails are doable, unfortunately the riffraff that’s made it Congress and our Executive branch aren’t committed to doing what’s necessary to the USS America about from the rocks of destruction. Political self interest and their continued incumbency is their top priority.

      Carl Nemo **==

      • griff  July 10, 2011 at 9:38 am

        The minimum wage argument is one of government coercion versus free market ideals. If an employer values a certain job at $5 per hour but is forced to pay $7.50 per hour it increases the cost of the product or service.

        On the flip side, if a potential employee values his time and labor at more than the employer is willing to pay, he is free to not accept the job and allow some one who is willing to work at that wage to apply.

        There will always be some one willing to work.

        Moreover, would it be better to have an individual working for $200 per week with the possibility of advancement and higher wages in the future and gaining valuable experience, or is it better to have that individual making $200 per week on welfare with no possibility for advancement or improving his station?

        • Jeffrey King  July 10, 2011 at 11:34 am

          I think we already answered your last question griff. Welfare to workfare.
          This created more low paying jobs in daycare and bring your kid to work programs. (or leave them in the parking lot)

          Where are the checks and balances for society as a whole? I don’t resent or admire wealth. What’s magical or clever about keeping more than you share?

          Anecdote. I’m working for a guy and doing my best to make the business succeed and prosper. I’m skilled, competent, reliable and interested in the future of the company. I’m just getting by at in terms of wages as I live a frugal lifestyle. The boss compliments me for my hard work and I’m near the top of my profession.

          It’s the holiday season, end of the year sort of thing. I don’t feel like I SHOULD get a bonus or a raise and I don’t start the converation. I do know that I’ve worked hard in the best interest of the company and my skills and years of experience aren’t reflected in the difference between entry level and mine is twisted. At some point I am told I won’t be getting a $10 per week raise. He says he hasn’t given himself a raise in years and I guess it’s his turn. I don’t ask him how he deserves one based on evidence of his performance.

          He bought a lake house (second property) and was already living a lifestyle far greater than anything I could give a crap about.

          Greed is good? OK, you’re right, and if citizens resist, there is always someone willing to do it illegally or overseas for a bowl of rice. Rice is always better than no rice at all.

          At least give them some beans too before you buy your yacht or jet.

          • griff  July 10, 2011 at 12:35 pm

            Ha. I’m currently muddling my way through a divorce, bankruptcy and foreclosure. I changed jobs six weeks ago for $2000 less per year, but it offers greater earning potential in the future. I started at $28,000. No yacht or airplane in my future.

            My last job I held for five years and never received a raise of any kind. In fact, two years ago we took a pay cut that was never reversed. I worked for the most recognized computer company in the world. I receieved no benefits and no vacation time. If I didn’t work, I didn’t make money. I worked five years straight, only taking the occasional mental health day – at my own expense.

            There is obviously a larger picture to minimum wage laws in terms of free market economics.

            http://www.thefreemanonline.org/columns/the-minimum-wage-good-intentions-bad-results/

            In a free society, people must have the right to offer their services in the marketplace for whatever price they choose, whether they are workers serving employers or businesses serving consumers. It is by this process that productivity, wage rates, and prosperity are maximized. Government has no more business objecting to a low wage rate for a menial job than it has objecting to a business that offers its services or products for a low price. Government intervention in these matters distorts economic decision-making, misallocates scarce resources, and destroys personal liberty.

            • Carl Nemo  July 10, 2011 at 12:52 pm

              Wow, some life story griff. Sorry to hear of your concurrent travails.

              “Geeks” the “Best Buy” sponsored computer repair function in our area charges $80 per hour for house calls. They also have a minimum charge just to show up. You might consider building a similar business on the side. You’d be your own man and there’s a lot of writeoffs and perks for businessmen that aren’t available to those that are simply employed by another. It might take several years to build a customer base, but once achieved you’d be doing quite well for yourself. Make sure you create the business under an LLC to protect your personal holdings from lawsuits etc. Just a thought.

              I get the impression you are quite computer savvy with your line of work by the way you’ve discussed such on this site over time. : )

              Carl Nemo **==

              • griff  July 10, 2011 at 2:47 pm

                It’s all good Carl. What doesn’t kill you makes you stronger. Or so I’ve been telling myself. I have an LLC and do some side work when it comes my way and I stayed on nights and weekends with my former employer as wel but I haven’t gotten much work my way. It would be nice to survive with just one job though. All work and no play…Well I still find time to do my share of partying.

                Which reminds me…We just hosted the 34th annual Boilermaker Road Race here in beautiful Utica, NY. I have a date with a 12 pack and a pool. Adios.

                • Carl Nemo  July 10, 2011 at 8:02 pm

                  Thanks for the feedback. Enjoy your road race, but don’t throw caution to the winds in order to win. I’ve read your account of evading a cop as a function of a speed trap. It indicates to me you have the “right stuff” for engaging revolution if necessary, so I/we don’t want to lose you as function of taking your machine down in a tight, gravelly turn… : )

                  You should consider advertising your computer repair services in local area newpapers. They usually have a deal for recurrent advertising over a period of time and the cost is relatively cheap. As you expand don’t forget local area targeted cable television ads too. You have to spend some money to make money. Besides the advertising is a write-off.

                  When someone’s PC craps out they get desperate. Many are willing to pay someone to fix their computer in the home whereas they are reluctant to take them into a repair shop due to prying eyes possibly reading their files. They feel more comfortable being close to the repair person; I.E., looking over their shoulder so to speak. : D

                  Good luck in all your endeavors good buddy. : )

                  Carl Nemo **==

                  • griff  July 10, 2011 at 11:22 pm

                    If necessary…

  2. Carl Nemo  July 9, 2011 at 3:50 pm

    Re: last paragraph

    “The solution to our national travails [are] doable, unfortunately the riffraff that’s made [it] Congress and our Executive branch aren’t committed to doing what’s necessary [to] the USS America about from the rocks of destruction. Political self interest and their continued incumbency is their top priority.” …extract from post my brackets

    Should read:

    The solution to our national travails is doable, unfortunately the riffraff that’s made it to Congress and our Executive branch aren’t committed to doing what’s necessary to turn the USS America about from the rocks of destruction.

    Political self interest and their continued incumbency is their top priority.

    My apologies for the errors.

    Carl Nemo **==

  3. Carl Nemo  July 10, 2011 at 12:28 pm

    What people don’t seem to realize is that large populations have associated social problems that can end up costing dearly over time.

    In 1870, America’s population was 38.5 million. Today we are approaching ten times as many people.

    Without SS, Medicare, Medicaid and welfare in general, we’d have large numbers of people lying in alleyways and the gutter. America would look like a Western version of Bangladesh or the slums of Calcutta and elsewhere in India.

    The real problem is linked to superfluous government programs, many so arcane in nature that it’s almost impossible to wrap one’s intellect around the funding for such. Our politicians in D.C. and even many state houses use our tax dollars to pander for votes and to maintain their incumbency; consequences be damned to their respective treasuries.

    I’ve maintained a lifelong attitude that I am my brother/sister’s keeper and don’t mind the cost for the maintenance of our societal tank, but wasting trillions on engineered wars in far off places, the creation of ‘teats on a boar hog’ Homeland ‘Security’ function along with their bumbling sub agencies truly chaffs my hide.

    If I’ve written it once I’ve done so a hundred times on this site that the MIC, as Ike warned us so in his farewell address, has incrementally and systematically destroyed this nation. Congress just authorized a $649 billion defense spending bill. Rest assured much of that money is going to down contractor ratholes, convenient cost overruns with little to no results shown on the ‘battlefields’ of Iraq, Afghanistan, Pakistan and Libya. Has anyone in Congress asked the deadly serious question as to why are we involved in the business of four distant virtual ‘buttholes of the world’, virtually pouring megatons of ‘debt money’ into the sand and rocks of those regions. Our national leadership has degnerated into a rogue, out of control beast that no longer listens to the command of its “Master” ; I.E., “We the people” …!

    The minimum wage, SS, Medicare and Medicaid are the least of our problems regardless of the cost. Soon this nation is going to become the shortest lived experiment in freedom and justice for all; it’s attempt at empire failing miserably. Rome’s hegemony lasted about a 1000 years, we won’t make to our 250th birthday. We’re headed for destructive revolution with the end result the Balkanization of America. Believe it…! : |

    link to “The Government Fraud and Waste Report” :

    http://hoguenews.com/?p=4834

    Carl Nemo **==

  4. Almandine  July 10, 2011 at 2:02 pm

    The size of the population is not an independent driver for social ills, but is instead related to the expansion of the aged and infirm population, as well as an expansion in cultural diversity, i.e., a greater percentage of illegals, wackos, wierdos, and degenerates that is expanding in tandem. This means that the number of calls for expanded social spending grows in relation to the absolute number of state “dependents”, requiring evermore larger sums to keep them all supported.

    The question soon becomes, “which of them deserve access to your tax dollars and mine?” The second question is, “who gets to decide, and how & why?” The third question is, “how long can it continue with the ever-expanding dependent population?” Fourthly, “now that the country has hit the wall financially, what should happen to those who could get out and fend for themselves, but the system is rigged to keep them dependent?” Finally, “what happens when the system collapses?”

    As for the current cost of this problem, you’ve got it backwards, Carl… SS, Medicare, Medicaid, other mandatory spending for 2010 was about $2.09T, while (discretionary) spending on govt programs was about $1.37T – all borrowed, we must note.

    http://en.wikipedia.org/wiki/2010_United_States_federal_budget

    It isn’t fraud and waste that’s our problem – although they should be stopped cold – it’s the fact that well-intentioned folks such as you and me have come to expect that the govt should be creating and supporting “dependents” when, as the old saying goes, “charity begins at home” and in fact it should end there, as well.

    There is nothing honorable in our taking via govt the fruit of our neighbors’ labors, under the guise of welfare, either general or otherwise. The Great Society has become the Great Ripoff. :- (

    • Carl Nemo  July 10, 2011 at 6:28 pm

      Well stated Almandine, but I differ with you on where our tax dollars are expended relative to the efficacy of such outlays. I’d rather see the money being spent at home on our fellow citizens, even freeloaders then up in smoke via spent munitions in far off zones of engineered conflicts with our tax debt money migrating into the pockets of MIC criminals, their international money-laundering banking buddies and paid crimpol shills in Congress.

      So what do we do with all the people that are now ‘freeloading’ on the system…cut them off and leave them flapping in the breeze? That only leaves the alternative of labor camps, debtor prisons or the reinstitution of slavery across all races as in ancient times which no doubt took care of the problem in a very proactive way. Do we want our cities to become the likes of Bangladesh or the slums of Calcutta with the disenfranchised; I.E, the unwashed masses living in dumpster boxes and spearing rats in back alleys with ‘fire hardened’ sticks…? Do we want people working for 89 cents per hour as in most of “Red China”…? / : |

      Like I’ve said there’s a price to be paid for the maintenance of our societal tank. Based on your writings, erudition and general thought processes, I’d say you are quite solvent as myself. I’ve relegated my tax ‘burdens’ to simply the price of doing business while enjoying what little freedom I/we have left in America. It’s not going to change in our lifetimes. In fact we are now witnessing the premature unraveling of a society that was once a “good thing” quoting a Martha Stewart expression, but is seemingly headed for the rocks of destruction.

      Carl Nemo **==

  5. Almandine  July 10, 2011 at 6:48 pm

    I’m not for spending our treasure in foreign lands, nor to prop up illegitimate or unsavory regimes of any sort – bankers included. I also don’t subscribe to global elitist machinations of the sort in which we seem to be involved:

    http://theintelhub.com/2011/07/08/see-how-the-elite-view-the-world-in-the-globalist-map-room/

    BUT, given the plight in which we seem to be finding ourselves… is a social revolution based on rejiggering our common cause not a positive thing? Must we all become slaves in order to prove our generosity and empathy?

    • Carl Nemo  July 10, 2011 at 7:49 pm

      Neither you or I will ever be slaves Almandine, but hopefully we’ll be righteous survivors to the end while enjoying the luxury of generosity towards others…no? : )

      Carl Nemo **==

    • Carl Nemo  July 10, 2011 at 8:23 pm

      Thanks Almandine for the great link material. It firms up much of what I’ve contributed to this site over the past number of years concerning their globalist scheme for subjugating the world via the destruction of the “nation state” while creating enterprise zones with the U.S. simply becoming a minor plantation within the greater order of such. Destroy the USD as the world’s reserve currency and they culmnation of this 100 year plus Cecil Rhodes inspired ‘project’ will become a reality.

      Carl Nemo **==

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