The U.S. Department of Labor released a August 19 report, stating that initial claims for jobless benefits rose by 12,000 last week to 500,000, which is fourth increase since the week of July 29. Following the four-week average, jobless figures have increased from 8,000 to 482,500, making last weeks claims, the highest average since December 2009.
Is the U.S. Economy Creating Jobs, At All?
The rapid increase in unemployment claims, suggest the economy is creating fewer jobs than in the first half of this year. More than a 100,000 jobs a month are needed just to keep up with the growth of the working-age population, even without reducing the millions of Americans who are already unemployed.
“We are looking at jobs growth in the vicinity of 150,000 to 175,000 per month going forward,” Peter Cardillo, chief market economist for Avalon Partners stated to the Kansas City Star. “That means the unemployment rate is going to stay on high level ground for a while.”
Previously, unemployment claims declined steadily last year from a peak of 649,000 in March 2009 as the economy recovered from the worst downturn since the 1930s. After flattening out earlier this year, claims have begun to grow again.
About 4.6 million unemployed workers are receiving extended unemployment benefits, as of week ending July 31. That’s an increase of about 300,000 from the previous week.
Is Another Unemployment Extension Need or Necessary, at this Point?
Federal unemployment insurance extensions in the Congress, added up to 73 extra weeks of benefits, to states with an unemployment rate over 8.5 percent. State unemployment agencies provide the initial 26 weeks of the supplemental insurance benefit. The number of people on the extended rolls has increased sharply in recent weeks after Congress renewed the extended program last month.
The data suggest that Senator Debbie Stabenow (D-MI) S-3706, “Americas Want to Work Act” bill would be necessary to avoid the economy from sliding into a double-dip recession. Senator Stabenow bill would offer an additional 20 weeks of Federal supplemental jobless insurance benefits, for states’ that the unemployment rate is at or above 8.5 percent. In addition, a $2000 tax credit would be available for business that hire the longest term unemployed job seekers or 99ers.
“…. I introduced the Americans Want to Work Act, a bill that would provide 20 additional weeks of unemployment insurance to people in states like ours with high unemployment, Senator Stabenow wrote. This “tier five” of benefits would be a little different from the other tiers of unemployment benefits, however, because in addition to benefits, it would also include a tax cut for businesses that hire workers who have been looking for work the longest”, Senator Stabenow stated.
Private employers added only 71,000 jobs in July. This increase was offset by the loss of 202,000 government jobs, including 143,000 temporary census positions that were added back in April 2010.
Is the Economy Headed in the Direction of a Double Dip Recession; which would Slow Returning Back to Work?
July marked the third straight month that the private sector hired cautiously. Economists are concerned that the unemployment rate will start rising again because overall economic growth has weakened significantly since the start of the year.
“This is obviously a disappointing number that shows ongoing weakness in the job market,” said Robert Dye, senior economist at the PNC Financial Services Group to the Associated Press.
Dye further stated that claims showed a similar pattern in the last two recoveries, but eventually began to fall again. The current elevated level of claims is a sign employers are reluctant to hire until the rebound is well under way. That’s what happened in the recoveries following the 1991 and 2001 recessions, which were dubbed “jobless recoveries.”
The recent increases in claims provide evidence that the economy has slowed and could slip back into a recession. After growing at a 3.7 percent annual rate in the first quarter, the economy’s growth slowed to 2.4 percent in the April-to-June period. Some economists forecast it will drop to as low as 1.5 percent in the second half of this year, stated in Huffington Post.
A Call for Michigan’s Unemployed Job Seekers to attend the Jobs, Justice and Peace Rally on August 28th
With the latest disappointing figure in the unemployment rate, it is even more important that Michigan’s unemployed job seekers and 99ers, attend the upcoming Rebuild America-Jobs, Justice and Peace Rally in Detroit, Michigan. Unless these important interest group show up in force, to demand job creation in both the state of Michigan and the country as a whole, the economy will continue to move in a negative aspect.
Michigan’s unemployment rate only dipped, one half of a percentage point, from 13.2 percent to 13.1 percent reported August 18. This is not enough of a impact, to return up to 500,000 unemployed, underemployed and other job seekers in this state, back to work.
The Rainbow Push Coalition, along with the United Automobile Workers is announcing an Rebuild America-Jobs, Justice and Peace Rally on August 28, 2010. The Rally will be held at the UAW-Ford National Program Center at 151 West Jefferson Avenue, Detroit, Michigan, starting at 10:30 AM.
“Reach Out Job Search”, Thursday, August 19th at 6PM radio show, will focus the entire hour on coordination efforts for the rally for the 99ers. Call into the program at (347) 934-0185, if you are willing to attend the march.