Mixed signals on jobless numbers
Unemployment hit its highest rate since 1983, though the pace of layoffs let up in May. So have we turned a corner in this recession? Janet Babin reports.
Job seekers wait in line for a job fair in Chicago, Ill. (Scott Olson/Getty Images)
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TESS VIGELAND: Three hundred and forty-five thousand people lost their jobs last month. Now the pace of layoffs is slowing, but the Labor Department reports the unemployment rate now stands at 9.4 percent. Want to hear the scary part? Well remember those bank stress tests? The unemployment rate used in their so-called "Worst Case Scenario" was a mere 8.9 percent. Oops.
Marketplace's Janet Babin has more from North Carolina Public Radio.
Janet Babin: The May jobs report was nasty. Especially if you happen to be one of the thousands of people who lost a job last month. Or one of the six million already out of work since this recession began.
Economist Mike Englund, at Action Economics, says with the unemployment rate approaching 9.5 percent,
Mike Englund: It's possible by the end of the year we could be up into the 10.4 percent area. The record for the post World War II period is 10.8 percent unemployment rate, so we seem to be taking a run at that figure.
But May's job losses were much lower than what economists expected. And this is the fourth straight month that jobless claims have declined. Some industries, like health care, hospitality and education, actually added jobs.
Economist Mark Vitner at Wachovia Corp. says the numbers reflect basic business logistics.
Mark Vitner: Businesses cut so deeply earlier in the year, that they don't need to cut so much right now. So we're seeing that the pace of layoffs is slowing, but there's not pickup in hiring yet.
Vitner says a strong uptick is at least a year off, even though he predicts the recovery will begin in a few months. So how does the economy get out of this mess, if people keep losing their jobs?
Joel Naroff at Naroff Economic Advisers says it does happen.
Joel Naroff: Business can produce more with the same number of workers. The simplest way of course to do it is to work them longer, have them do overtime.
That would mean the economy's growing, even if jobs are being lost. It's how we got out of the last two recessions. Naroff says it could work again this time.
I'm Janet Babin for Marketplace.
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