According to the National Bureau of Economic Research, the largest economic slowdown since the Great Depression ended in June 2009. The latest jobs numbers, however, suggest otherwise.
The June employment report showed that nonfarm payrolls rose by a meager 18,000, far less than even the most conservative estimates of 90,000. The private sector added 57,000 jobs, while the government lost 39,000. The overall unemployment rate in the United States rose by a tenth of a percent to 9.2%, the highest level since September 2010. The disappointing data puts another damper on an already slow recovery and does not bode well for the immediate future of the U.S. economy.
Earlier today on Varney & Co., Republican Representative Phil Gingrey from Georgia emphasized the negative reaction to the employment numbers, but stressed that there could be more bad news to come. “We’ve got reports out of Georgia, the Atlanta Journal Constitution; saying that employers across the country are projecting more cutbacks in jobs as we go forward, the news is not good.”
Joanie Ruge, senior vice president of field operations for the SFN Group, echoed Mr. Gingrey’s sentiment. “I think when you look at the government sector, and we’ve seen this now for a few months, we’re really starting to see those declines and we are hearing about all those cuts. I expect that we are going to continue to see job losses in that public sector.”
Another issue is that despite large corporations having large amounts of cash on hand, they haven’t started hiring. According to Ruge, these businesses “have learned how to operate so efficiently over the last two years.” “They have done all the layoffs, they’re getting by with hiring less people but that is not going to be sustainable forever,” she said.
The question is when will these business start to hire more workers. Unemployment has been over 9% for 24 of the past 26 months and there is no end in sight. The average time that someone has been unemployed is at a record high of 40 weeks. The bad news does not end there; payrolls for the past two months were revised down by a total of 44,000 to show job gains of 25,000 and 217,000 in May and April, respectively.
Other countries do not seem to be feeling the same pain. For example, Canada, a country with a 10% of population the U.S., created over 28,000 jobs in June. In addition, the stock market seems to be shrugging off the negativity. FBN’s Sandra Smith pointed out that the market is “still posting healthy gains on the year” and also cited improving retail sales as a sign that the consumer may be feeling less pessimistic about the economy.
Either way, President Obama has a tough job ahead. For the president to achieve an employment rate under 8% by Election Day, at least 225,000 jobs would have to be added each of the next 16 months. If the next jobs reports continue to disappoint, the economy could be stagnant for a long time to come.
Stuart Varney joined FOX Business Network (FBN) as an anchor in 2007 and is the host of "Varney & Co." (9-11 AM/ET) on weekdays. Click here for more information about Stuart Varney.