First-time unemployment claims down
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Kai Ryssdal: It has been a while since we hauled this one out, but today’s economic news comes with the welcome preface of better-than-expected. And it comes in two flavors too: The trade deficit was down in July. We’re selling more stuff overseas than we have been. Back home, new claims for unemployment benefits fell last week, as well.
Marketplace’s Mitchell Hartman reports the job market does appears to be emerging from hibernation ever so slowly.
Mitchell Hartman: The average number of new unemployment claims has actually been on the decline ever since mid-August, when it peaked. So it’s probably a good bet the labor market really is on the mend, says Nigel Gault at IHS Global Insight.
Nigel Gault: It looks as though claims that hit 500,000 a few weeks ago are now gradually on their way down.
But here’s the thing: Gault says economists want to see claims fall much more before they declare this a strong jobs recovery. Instead, one year after the economy started growing again, unemployment remains high. And companies are adding jobs very slowly — less than 100,000 a month.
But at least that’s better than we did after the recession of 2001.
Gault: It took almost two years for the economy to actually start to create jobs again.
After the 1990s recession, the “jobless recovery” was just about as bad.
But there is a big difference, says economist James Galbraith at the University of Texas.
James Galbraith: In this Great Recession, we lost over eight million jobs — more than twice what we lost in the previous two recessions. And so this is just a much deeper hole, and that’s the problem.
A problem, says Galbraith, because job growth would need to be phenomenal — double or triple the current rate for years — just to backfill the hole. And he’s not optimistic employers will step up.
Galbraith: A great many firms cut their costs and their labor forces really drastically. Having done that, they’re very reluctant to take workers back. In fact, they find ways to achieve the same results with fewer workers.
And as long as companies keep chasing increased productivity so hard, it’s unlikely they’ll add enough jobs to take a big bite out of unemployment.
I’m Mitchell Hartman for Marketplace.
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