The U.S. economy lost another 62,000 jobs in June, the U.S. Labor Department announced Thursday, as surging fuel prices forced companies in the world's largest economy to continue to cut expenses to protect profits in the face of the economic slowdown. Meanwhile, the unemployment remained at 5.5% in June, the highest level since October 2004.
Economists surveyed by Bloomberg News had expected the U.S. economy to shed 50,000 jobs in June. Furthermore, June was the U.S. economy's sixth straight monthly job loss. The U.S. economy lost a revised 62,000 jobs in May, up from the 49,000 earlier estimate; the U.S. economy lost 28,000 jobs in April.
The June job losses brought total job losses in 2008 to 438,000, the Labor Department said.
Meanwhile, the number of unemployed persons was unchanged at 8.5 million in June. Since March 2007, the number of unemployed persons has increased by 1.2 million, and the unemployment rate has risen by 1.5% point.
Job losses: negative trend for U.S.
Economist David H. Wang told BloggingStocks Thursday the six-month decline in jobs is one of the worst trends possible for the U.S. economy. "In addition to the enormous economic hardship it causes, of course, for individuals, job losses reduce the U.S. economy's ability to grow because income and business activity is taken out the system," Wang said. "We may not have a recession from a GDP standpoint yet, but 438,000 jobs taken out of the economy is a recession, from a jobs standpoint."
Further, Wang said the six-month job decline, combined with the European Central Bank's quarter-point interest rate increase Thursday, complicates matters for the U.S. Federal Reserve.
"On the one hand, the Fed has to defend the dollar to prevent further commodity inflation from increasing U.S. inflation. That would require an interest rate increase," Wang said. "On the other hand, the economy is clearly in contraction mode, so how can a central bank increase interest rates in this environment? Doing so risks slowing the economy further, resulting in increased job losses. It's a difficult choice set for the Fed, to say the least."
Still, Wang said he believes the Fed will increase interest rates at its next meeting, by a quarter-point, to defend the dollar in light of the ECB's decision, then take a pause.
"They'll increase interest rates one time to check the dollar's decline, then hold off," Wang said. "Hopefully, the ECB will now stand-pat on interest rates as well, so central bankers on both sides of the Atlantic can get back to the biggest problem, slowing economic growth."
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Reader Comments (Page 1 of 1)
7-03-2008 @ 6:32PM
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7-03-2008 @ 11:15AM
speculator said...
With revisions this report is bad, along with over 400K jobless claims. we are in recession. I was surpised by how much some stocks are down in this recession.
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