The Labor Department reported that in the week ended June 5, initial claims for unemployment fell only 3,000 to 456,000. Economists surveyed by Bloomberg News had predicted claims to fall to 450,000. The four-week average rose to 463,000 last week from 460,000 previously.
Here is a breakdown of of subcategories that were reported:
- The number of people continuing to receive jobless benefits declined by 235,000 in the week ended May 29, the lowest since December 2008. This number is deceiving because it does not indicate how many persons exhausted their benefits.
- Thirty states and territories reported an increase in claims, while 23 reported a decrease.
- Private payrolls rose only 41,000 in May. Economists had predicted 189,000.
These numbers clearly show that the employment picture is not improving enough to stimulate consumer spending which accounts for 70% GDP. Walmart (WMT), the world's largest retailer, said that gasoline prices and unemployment hurt traffic to its U.S. stores.
The heavy drag of unemployment on the economy is hampering growth. In past recessions, employment picked up rather quickly and the economy was able to get back on track. This recession is different. The damage done from the financial meltdown was greater, more jobs were lost (many of which will not return) and the housing market collapsed at the same time.
Americans had to flee their homes or be foreclosed upon. Employers are hiring part-time or temporary workers at minimum wage.