June 06, 2009|By Janet Hook and Jim Tankersley | Janet Hook and Jim Tankersley,Tribune Washington Bureau
WASHINGTON - -The nation's breathtaking pace of job loss slowed significantly in May, bolstering hopes that the worst of the current recession is over, but millions of Americans and their families face continued economic pain with the unemployment rate jumping to 9.4 percent. And wages remained essentially flat, the government reported.
The contrasting trends underscore a painful economic reality: Even as the recession winds down, hundreds of thousands of workers may continue to lose their jobs - and the unemployed might be among the last to reap the benefits of recovery.
The Labor Department reported Friday that the U.S. economy shed 345,000 jobs in May, bringing the total number of jobs lost in the current recession to 6 million. The unemployment rate rose to the highest level since 1983, a full one-half percentage point above the 8.9 percent in April.
Normally, losing 300,000 jobs and seeing the jobless rate near 10 percent would be cause for alarm. But May's job losses are the lowest since September, and they were half of the average monthly losses in the past six months.
In the present climate, that is seen as the latest in a series of signs that the economy is beginning to turn around. Home sales are up. Consumer confidence is improving. The stock market has rebounded since hitting a 12-year low in March.
"The pace of the recession finally seems to be slowing," said Andrew Stettner, deputy director of the National Employment Law Project. "But with the unemployment rate climbing, it should be abundantly clear that the job market is in a hole that could take years to climb out of."
Labor Secretary Hilda L. Solis said dislocated workers historically have a hard time getting back into the work force.
"It's not going to turn around as quick as you and I would like to see it," Solis said in an interview to be aired Sunday on C-SPAN.
Providing further evidence of uncertainty about the future, the Federal Reserve Board reported Friday that consumer borrowing dropped by $15.7 billion in April - one of the biggest monthly drops ever.
The decline suggests that even though confidence may be up, consumers remain wary of major new spending. That raises a caution flag about the speed with which a recovery may develop. Consumer spending now accounts for about 70 percent of the nation's gross domestic product.
In commenting on the jobs report, Vice President Joe Biden said the administration would announce on Monday plans to speed up expenditure of money under the $787 billion stimulus law earlier this year.
Republicans said the rising unemployment rate cast doubt on whether that program is working effectively.
"The only industry that appears to be on a hiring spree is us, the federal government," said Rep. Kevin Brady of Texas, ranking Republican on the Joint Economic Committee. "But government hiring is not an effective method for aggregate job growth."
More than four months into the new administration, said Virginia Republican Eric Cantor, House minority whip, "This is President Obama's economy now." Economists say it is too early to assess the job-creation impact of the stimulus program, and that it is hard to measure how many layoffs were prevented.
But Sung Sohn, an economist at California State University, Channel Islands, said the stimulus has helped the job market by giving employers more grounds for optimism about the future.
"The psychology has improved significantly because of the massive economic stimulus program," Sohn said. "That's one of the reasons why layoffs are slowing down." The grim realities of the job market were underscored by the government's calculation regarding workers who had abandoned their job searches or settled for part-time employment. If they were factored in, the Bureau of Labor Statistics said, the nation's unemployment rate would have been 16.4 percent.
Hiring and firing trends varied widely through the diverse U.S. economy.
Manufacturing employment continued to drop sharply, led by 30,000 lost jobs related to the reeling domestic automobile industry. The bureau reported that the number of auto-related jobs have fallen by 50 percent from their recent peak in 2000.
In contrast, education, health care, leisure and hospitality industries posted no losses in May.
In construction, 59,000 jobs were lost in May - a major improvement from the past four months when an average of 125,000 jobs a month were lost. That industry is a beneficiary of the infrastructure spending that constitutes a major element in the stimulus program.
Private service industries also saw their losses slow - a sign that, even if a robust recovery is not under way, the free fall has been halted.
"That's good news,"' said Nigel Gaunt, chief U.S. economist for IHS Global Insight. "They are out of the panic phase."
