Zero job growth latest bleak sign for U.S. economy
WASHINGTON & SANTA FE, NM (By Shaila Dewan, NYT) September 3, 2011― August brought no increase in the number of jobs in the United States, a signal that the economy has stalled and that inaction by policy makers carries substantial risk.
The government report on hiring, released on Friday, prompted another round in a relentless diminution of economic expectations. The unemployment rate, at 9.1 percent, did not change last month, and the White House said it was expected to stay that high through at least 2012.
The optics of a giant zero in the jobs column — more symbolically powerful, perhaps, than even a small decrease might have been — increase the pressure on President Obama as he prepares to deliver a major address on job creation next week, on Republicans who have a starkly different approach to economic revival and on the Federal Reserve, whose policy makers have been divided over the wisdom of using its limited arsenal of tools to get the economy moving again.
The White House immediately seized on the report to bolster the president’s impending call to action. Republicans countered that the numbers were further proof that the stimulus policies of Mr. Obama, whom they quickly dubbed “President Zero,” were not working.
Mr. Obama, who instructed the Environmental Protection Agency on Friday to pull back on more stringent standards on ozone emissions in response to complaints that they would hurt hiring, is expected to propose tax incentives to promote hiring and infrastructure spending. He also is expected to renew the payroll tax cut and extend unemployment benefits, both of which are set to expire.
The Federal Reserve is expected to weigh whether to take steps to help lower long-term interest rates to bolster the economy at its two-day meeting this month.
The new data, a monthly snapshot from the Department of Labor, sent stocks sliding. The Dow Jones industrial average fell 253.31 points, 2.2 percent, Friday, closing at 11,240.26.
Some economists said the possibility of a double-dip recession was increasing.
“As long as payrolls are weak, you will continue to hear cries of not just recession risk but cries that the United States is in a recession and we just don’t know it,” said Ellen Zentner, the senior United States economist for Nomura Securities.
This is not the first time that job growth, the most important measure of the economy for many Americans, has ground to a halt since the recovery. It dropped into negative territory in the middle of last year after three months of strong showings. This time, the slowdown comes after the earthquake in Japan, a spike in oil prices and the European debt crisis, in addition to political gridlock in America.
Even if the economy does not contract, the projected growth rate is so slow it will not be enough to absorb new people entering the labor market, much less the unemployed.
“We have virtually the same number of jobs as we did in January 2000,” said Patrick J. O’Keefe, the director of economic research at J. H. Cohn, an accounting firm. “Were jobs to continue to grow at the 2011 monthly average, it would take more than four years to return to the prerecession employment level.”
In August, the private sector added 17,000 jobs, a number depressed by the Verizon strike. Some 45,000 Verizon workers were off the payroll when the survey was taken. They will reappear in next month’s total. But even adding those workers back to the total, the gain would have been the smallest since May of last year.
The problem is less that companies are laying people off than that they are not hiring. Consumers and employers alike seem almost frozen in place, with many economists saying that they seemed paralyzed by uncertainty about the future after the brinksmanship of the debt ceiling debate, the ensuing cut in the United States credit rating by Standard & Poor’s, stock market whiplash and more bad news from Europe.
“There is really a darkening cloud that seems to hover over the U.S. economy because of the lack of progress being made,” said Bernard Baumohl, chief economist at the Economic Outlook Group. “There is extreme frustration with Congress and the administration not working together to address the fiscal issues.”
Much of the movement that did appear in the jobs report went in the wrong direction. Revised numbers showed that job growth in June and July was smaller than previously indicated. In August, wages fell and the average number of hours worked inched down — a sign that businesses had less for employees to do.
Governments continued to cut jobs, the Labor Department reported. Small gains at the state level were attributed in part to the return of workers from the government shutdown in Minnesota. Local governments lost 20,000 jobs as they continued to struggle with budget shortfalls and the disappearance of federal stimulus money.
Two of the bright spots in the economy over the last year, manufacturing and retail, lost steam, falling by 3,000 and 8,000 jobs, respectively. The health care sector added 29,700 jobs in August. Construction lost a net of 5,000 jobs.
The unemployed also seemed to be marching in place. Six million people have been out of work for 27 weeks or more, about the same number as in July. The median duration of unemployment, 21.8 weeks, increased slightly.
The general unemployment rate, which counts only people who looked for work in the previous four weeks, held steady at 9.1 percent. A broader measure that includes people who have looked for work in the last year and people who were involuntarily working part time instead of full time increased slightly to 16.2 percent. The percent of working-age adults who were employed, already at its lowest rate since 1983, was at 58.2 percent.
Overall unemployment is lower than it was a year ago, but those gains have been among whites, Hispanics and Asians. For blacks, unemployment has increased, to 16.7 percent from 16.2 percent.