Rising Unemployment Points to Economic Pain
-- July 3, 2003
You can ignore all the talk from Wall Street hype-meisters about how the economy is booming back to life. The latest jobs data show just how weak the economy really is. Not only did the unemployment rate reach a nine-year high in June, but non-farm payrolls fell 30,000, and May's job loss was revised upward to 70,000 from the initial estimate of 17,000.
It just keeps getting worse! The Labor Department reported today that initial jobless claims soared to 430,000 in the week that ended Saturday from 409,000 a week earlier. That represents the 20th straight week that claims have surpassed the 400,000 threshold, which indicates a shrinking labor market.
So far this year, the economy has lost 394,000 jobs. That's not a recipe for economic recovery! Analysts say that the economy must expand at a 3% annual rate to generate new jobs. But the economy grew only 1.4% in the first quarter and an estimated 2% in the second. The economy hasn't seen two straight quarters of at least 3% growth since the second half of 1999. So we certainly can't hope for a hiring binge anytime soon.
With so many people out of work or afraid of losing their jobs, consumers will become increasingly reluctant to spend, and that means the economy should stay weak. It's no wonder the stock market fell after the job news today -- and you can expect further stock declines in coming days.
related article: Jobless Rate Jumps to 6.4%