US economy continues to hemorrhage jobs in July
Unemployment hits 4-year high
The unemployment rate spiked again in July, to 5.7 percent, its highest level in more than four years and a strong signal that come Election Day, millions of Americans will still be hunting for work.
"We are not seeing a catastrophic collapse in the job market, like you often see in recessions," said James Glassman, senior domestic economist for JPMorgan Chase. "What we are seeing instead is a steady hemorrhaging of jobs, and that is going to continue until housing stabilizes and stops dragging down the rest of the economy."
The nation's employers cut their payrolls for the seventh consecutive month, this time by 51,000 jobs, the government reported yesterday. For millions still at work, hours were reduced, and the average raise was less than enough to keep up with inflation.
The steady erosion in payrolls - 463,000 jobs have disappeared since January - cut across nearly every sector in July. Teenagers, 16 to 19, trying to land work were particularly hard hit. Their unemployment rate, 20.3 percent, up 2.2 percentage points in a month, was the highest since 1992, contributing significantly to the jump in the overall unemployment rate. That rate jumped from 5.5 percent in June and 5 percent in April.
"Parents don't push their kids to go to work in good times," Glassman said, "but they probably are doing so now with gasoline and food prices squeezing family budgets."
The Federal Reserve's policymakers, who have cut the key short-term interest rate they control to a low 2 percent, in an effort to stimulate the economy, are almost certain to leave the rate at that level when they meet in Washington on Tuesday.
The weak economy coincides with a sharp increase in labor productivity in the second quarter, which helps to explain why employers have been shedding workers. The latter are increasingly producing more in a day's work than their employers can sell. That is partly because their employers prod them to do so, or introduce labor-saving devices.
In either case, employers are laying off excess staff, reducing their hours, or holding back on weekly raises, which rose at an annual rate of only 2.8 percent in July for the typical worker. That is well below the inflation rate of more than 4 percent.
