The U.S. economy lost 49,000 jobs in May, the U.S. Labor Department announced Friday, as companies in the world's largest economy continued to cut expenses to protect profits in the face of the economic slowdown. Further, the unemployment rate surged 0.5 percentage points to 5.5% in May from 5.0% in April. It was the largest percentage point increase in the unemployment rate since 1986, the Labor Department said. It's also the highest unemployment rate since October 2004.
Economists surveyed by Bloomberg News had expected the U.S. economy to shed 60,000 jobs in May 2008 and the unemployment rate to rise to 5.1%. Also, May was the U.S. economy's fifth straight monthly job loss. The U.S. economy lost a revised 28,000 jobs in April.
Further, the number of unemployed persons increased by 861,000 to 8.5 million in May. The average work week in May was unchanged at 33.7 hours.
Economist David H. Wang told BloggingStocks Friday that if the U.S. economy is not in a recession, it's barely growing. "These May job loss numbers indicate that if the economy is not recession it's the weakest growth possible. We are in a growth recession because unemployment is now leaping ahead," Wang said. "Companies are continuing to belt-tighten and become more cautious, jobs are being cut, and vacant positions are not being filled. It's almost impossible for the economy to sustain these type of job cuts and not be in a recession."
Wang added that the effective unemployment rate "in reality, is considerably worse than the official Labor Department statistic" due to what many economists argue are the limitations of the Labor Department's metric.
"The Labor Department statistic does not measure or count 'discouraged workers,' " Wang said. "By that measure, the unemployment rate is closer to 9%. By that measure, 1 in 10 of adults eligible for work cannot obtain work. There's almost no way the U.S. economy can achieve balanced economic growth with almost 10% of the labor force idle."
No Fed policy change seen
Wang added that while he doesn't expect the May jobs report to cause the U.S. Federal Reserve to alter its pause in the interest rate reduction cycle, the rising unemployment level may prompt more fiscal pump priming efforts from Congress.
"The economy is flashing stall signs. If unemployment continues to rise, mortgage defaults will continue rise, leading to more corporate and economy stress, and that would certainly require Congressional attention."
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
6-07-2008 @ 10:37AM
susan said...
Even though unemployment is up, there are still thousands of $75K, $100K and $150K jobs.
http://www.realmatch.com
http://www.monster.com
http://www.careerbuilder.com
If one person looks for a job, they will find one, one person is not a statistic.