Job Creation in United States Bottling Up
Published in El País
(Spain) on 1 June 2012
by Sandro Pozzi (link to original)
(Spain) on 1 June 2012
by Sandro Pozzi (link to original)
Translated from
by Laura L. Messer.
Edited by Hodna Nuernberg.
The creation of only 69,000 jobs in May indicates that growth is losing impetus. The unemployment rate of the world’s largest economy reaches 8.2 percent.
No matter how much one would like to disguise the figures, the math does not change. The United States generated only 69,000 net jobs in May. In addition, the numbers for the month of April were revised downward to just 77,000 new positions. And, as if the signification of this double blow was not enough to certify that the economy is seriously cooling off, the unemployment figure climbed by a tenth of a percentage point to reach 8.2 percent. It is the first unemployment increase in 11 months and the smallest job creation rate since May of 2011.
May is the most important month, as far as unemployment is concerned, given the indicator’s effect on turbulent markets and on the U.S. presidential race. Wall Street had anticipated the creation of 155,000 jobs in May and a corresponding unemployment rate of 8.1 percent. President Barack Obama cannot allow the latter figure to climb.
At the moment, the labor market is going to make re-election difficult for him. The recovery is very slow and more solidity is necessary in order for the expansion to speed up. Further, it is not only about creating jobs: Salaries should also rise, in order to account for the effect of inflation. Moreover, this weakness serves to make the U.S. more vulnerable to the crisis in Europe and to China’s potential cooling-off.
The effect was immediately felt on Wall Street, where the Dow Jones was preparing to open nearly two percent down. It is not only that job creation in May was low. The April indicator had soared to 115,000 jobs a month ago, but now hovers at nearly half that level. Alternately, the private sector held back their hiring rate to 82,000 net jobs in the last month.
At present, there are 12.7 million unemployed individuals in the U.S., including 5.4 million people who have been out of work for more than six months. The rate of unemployment among youth has reached 24.6 percent. The unemployment rate would be much higher if it took into account those people who abandon the job market out of frustration or the wave of retirements among baby boomers.
A month ago, the Federal Reserve projected that unemployment would fluctuate between 7.8 and 8.2 percent this year, not dipping below 7 percent until 2014. Yesterday, it published the first revision of first quarter growth, which was reduced by 0.3 percent and remains at 1.9 percent of the gross domestic product. A third reading is anticipated. This downward revision confirms the economy’s deceleration in the early months of this year, as opposed to the relatively strong growth of three percent that was recorded in late 2011.
Brent Crude below $100
The effects of a growing concern over the weakening of both the U.S. and the global economy have now reached the petroleum industry. The price per barrel on the New York Mercantile Exchange is $84.60, which reflects a drop of 2 percent. The strengthening of the greenback against the euro has bolstered this drop. However, this is good news for consumers’ wallets. Brent Crude, a European trading classification, is valued below $100. By mid-afternoon the price of a barrel was close to $99.00 — the level reached last summer, after the price had fallen over 2 percent.
No matter how much one would like to disguise the figures, the math does not change. The United States generated only 69,000 net jobs in May. In addition, the numbers for the month of April were revised downward to just 77,000 new positions. And, as if the signification of this double blow was not enough to certify that the economy is seriously cooling off, the unemployment figure climbed by a tenth of a percentage point to reach 8.2 percent. It is the first unemployment increase in 11 months and the smallest job creation rate since May of 2011.
May is the most important month, as far as unemployment is concerned, given the indicator’s effect on turbulent markets and on the U.S. presidential race. Wall Street had anticipated the creation of 155,000 jobs in May and a corresponding unemployment rate of 8.1 percent. President Barack Obama cannot allow the latter figure to climb.
At the moment, the labor market is going to make re-election difficult for him. The recovery is very slow and more solidity is necessary in order for the expansion to speed up. Further, it is not only about creating jobs: Salaries should also rise, in order to account for the effect of inflation. Moreover, this weakness serves to make the U.S. more vulnerable to the crisis in Europe and to China’s potential cooling-off.
The effect was immediately felt on Wall Street, where the Dow Jones was preparing to open nearly two percent down. It is not only that job creation in May was low. The April indicator had soared to 115,000 jobs a month ago, but now hovers at nearly half that level. Alternately, the private sector held back their hiring rate to 82,000 net jobs in the last month.
At present, there are 12.7 million unemployed individuals in the U.S., including 5.4 million people who have been out of work for more than six months. The rate of unemployment among youth has reached 24.6 percent. The unemployment rate would be much higher if it took into account those people who abandon the job market out of frustration or the wave of retirements among baby boomers.
A month ago, the Federal Reserve projected that unemployment would fluctuate between 7.8 and 8.2 percent this year, not dipping below 7 percent until 2014. Yesterday, it published the first revision of first quarter growth, which was reduced by 0.3 percent and remains at 1.9 percent of the gross domestic product. A third reading is anticipated. This downward revision confirms the economy’s deceleration in the early months of this year, as opposed to the relatively strong growth of three percent that was recorded in late 2011.
Brent Crude below $100
The effects of a growing concern over the weakening of both the U.S. and the global economy have now reached the petroleum industry. The price per barrel on the New York Mercantile Exchange is $84.60, which reflects a drop of 2 percent. The strengthening of the greenback against the euro has bolstered this drop. However, this is good news for consumers’ wallets. Brent Crude, a European trading classification, is valued below $100. By mid-afternoon the price of a barrel was close to $99.00 — the level reached last summer, after the price had fallen over 2 percent.