As Joe Lazzaro posted earlier, the unemployment rate rose to 5.5% last month. And for the fifth straight month, payrolls fell.
Specifically, in May employers shed 49,000 jobs and the unemployment rate rose significantly from the April rate of 5% -- far higher than economists had expected. The Wall Street Journal reports that Wall Street economists had expected a 60,000 decline in payrolls last month and only a 5.1% unemployment rate
What's also of concern is that workers' income shrank in relation to booming inflation. Although workers' wages grew nominally at 0.3% in May to $604.58 a week, and for the 12-month period posted a 3.4% gain, inflation is running at 4% officially. So on an inflation-adjusted basis, workers' wages are dropping.
With gasoline prices up 100% in the last year, a worker who fills up a 20 gallon tank twice a week now pays $160 -- 26% of that paycheck -- compared to 13% last year. And if that worker gets fired, it will be awfully expensive to drive around looking for a job.
With 70% of GDP growth coming from those workers and gasoline prices topping $4 a gallon, those deficit enhancing rescue checks from the government don't seem to be doing their job all that well. What will the government cook up next?
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
6-07-2008 @ 9:24AM
richard said...
We are all aware that the official inflation rate (4%) doesn't include the cost of food and energy -- two of the most important expenses in the average person's income.
However, the Bush mob keeps feeding the corporate swindlers free money via the obscenely low 2% interest borrowing rate the fat cats can sink into their gambling and speculator adventures on Wall Street.
While Bush's Feeding Chairman, Ben Bernanke, keeps bailing out corporations like Bear Stearns, the result is a weaker dollar with higher costs for American workers who are struggling just to feed their families and pay their mortgages.
Bush of course was hoping to apply band-aids to the faltering economy just long enough for him to leave town with a free pass on January 20, 2009.
But as his house of cards economy is in virtual free-fall his legacy now will include not only a disastrous Iraq War which was launched on a pack of lies and deceit, but an economy that has left behind millions of unemployed, rising inflation, record budget deficits, $9.4 trillion national debt. falling wages and foreign countries like China who, once they begin redeeming the U. S. government securities Bush has sold them to finance his war, they and other foreign creditors will own most of our U.S. assets and corporations.
Bush's legacy: Fear, War, Busted Economy and Deaths of tens of thousands of people in a genocidal, ethnic cleansing campaign in Iraq, the scope and breadth of which make dictator Slobodan Milosevic look like a Boy Scout by comparison.