Two separate jobs reports released this week present ominous signs for a sluggish economy barely able to maintain its slow recovery. Both reports draw the same conclusion: that the unemployment rate remains stuck at a stubborn 9.6% official rate – not counting those that have stopped receiving unemployment benefits, the underemployed or individuals who have stopped looking for employment altogether due to a tough job market.
While the unemployment rate is virtually unchanged, the economy lost 95,000 jobs overall, with the private sector adding only 64,000 jobs. And a newly released Gallup survey actually found unemployment increasing to 10.1% in September, up 0.8% from what was found in August. The Labor Department numbers are from the first half of the month and since the Gallup report shows numbers for the second half, there are worries that official government numbers for October could show a marked increase in the unemployment rate.
Labor Secretary Hilda Solis attempted to put a positive spin on the numbers in a recent statement. “In the six months before the president took office, we lost nearly 4 million jobs. We now have added private sector jobs for nine straight months, totaling 863,000 private sector jobs since the beginning of the year,” Solis said. “While we need to pick up the pace of recovery to erase the job losses and get Americans back to work, this encouraging growth shows that we are headed in the right direction.”
Most job losses occurred in the government sector, with 159,000 positions cut between the end of temporary Census Bureau jobs and belt tightening by state and local agencies. Construction jobs, which have been flat since February, were also cut by 21,000. The most noticeable increase from private sector gains came in the health care industry which saw 24,000 jobs added.
In sharp contrast to Solis’ optimism, Gallup’s Dennis Jacobe warns that the Labor Department’s jobs report could be understating the magnitude of the problem, especially as Congress is on recess in preparation for upcoming midterm elections. “[T]he sharp increase in the unemployment rate during late September does not bode well for the economy during the fourth quarter, or for holiday sales,” observes Gallup’s Dennis Jacobe. “In this regard, it is essential that the Federal Reserve and other policymakers not be misled by Friday’s jobs numbers. The jobs picture could be deteriorating more rapidly than the government’s job release suggests.”