Economists See Hope in May Jobs Report

Posted on June 8, 2009

Many economists welcomed the May jobs report as a positive sign even though the economy lost anouther 345,000 jobs and unemployment climbed to 9.4%. The optimism is only there because there were genuine fears the economy was in a terrifying free-fall.
Economists described the Labor Department's monthly jobs report, released Friday, as an unambiguous sign of improvement, yet also clear evidence of broadening national distress, as millions of households grapple with joblessness and lost working hours.

The fact that a report showing the highest unemployment rate in more than a quarter-century was embraced optimistically testified to the stark fears over the economy in recent months.

"The free fall that the job market was in does finally appear to be tapering off," said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. "It's the prelude to an economic and job recovery later this year."
VOA News reports that the unemployment rate is currently higher than the White House and analysts had expected and forecasted months ago.
The White House says America's employment picture is worse than the Obama administration had anticipated just a few months ago. The somber admission follows the latest jobless report showing the highest unemployment rate the United States has seen in more than 25 years.

U.S. unemployment jumped a half percent in May, to 9.4 percent prompting this comment by Austan Goolsbee, a member of President Barack Obama's Council of Economic Advisors:

"The economy clearly has gotten substantially worse from the initial predictions that were being made, not just by the White House, but by all of the private sector," said Austan Goolsbee.
The high unemployment rate is likely why President Obama announced a new plan (PDF file) to create jobs today. The Christian Science Monitor notes that the plan has little room for error.
Yet the administration is still in rescue mode. On Monday, it formally announced its plan to step up its recovery efforts and create 600,000 jobs, including 125,000 summer jobs for youth.

This may be a good thing. A recession that's moderating is still a recession. People are still losing their jobs at a faster rate than they�re finding new ones. Supporters of continued stimulus are those who see no recovery this year � or such a weak one that it will still feel like recession.

But the economy moves so fast � and government stimulus moves so slowly � that the administration risks falling behind the curve.
Several experts quoted here in a U.S. News article say they expect job losses to continue to moderate but the unemployment rate is still expected to come closer to or exceed 10%.

Job losses may moderate but it could be difficult to estimate the fallout from the GM and Chrysler bankruptcies. Retail sales in May were also weak and another weak month or two could result in more layoffs in the retail industry. There are many unknowns we have to yet to face in this recession.