Jobs Outlook Dismal
Most analysts see the unemployment rate remaining staying at 8.2%, while some anticipate an increase. The wildcard is the number of adults actually working or seeking jobs -- the measure of the labor force used to calculate the unemployment rate.
Adults who have quit looking and left the labor force altogether are responsible for 99% of the reduction in the unemployment rate from 10% since October 2009.
Many adults have reason to be discouraged -- new jobs pay lower wages than did those lost during the recession. Policies, favoring bank consolidation and financial schemes, alternative energy and high technology and government expansion of health care are hampering jobs creation in core-manufacturing resources and many service activities.
Those policies encourage more off-shoring, push down wages, pad big bonuses and dividends and skew income toward the wealthiest in Manhattan, the Silicon Valley and other bastions of privilege.
Specifically, over the last three months wage income, as measured by the Commerce Department, grew at a 1.4% annual pace -- much less than anticipated inflation -- while interest and dividend income advanced nearly 10%. Polices like Dodd-Frank are pushing regional banks, which finance small business jobs creation, to sell out to Wall Street giants. Favoritism in tax arrangements toward private equity and other investment schemes are thumbing down wages on Main Street and raising bonuses and dividends on Wall Street.
The economy expanded at an anemic 1.9% annual pace during the first quarter, and a good deal of that growth was momentum in consumer spending, as households took on more long-term debt to finance autos and higher education.
Consumers cannot continue taking on debt in the manner of the boom years of the 2000s -- auto purchases have likely peaked, and don't look for universities to recruit any more reluctant students taking shelter from a tough job market. The word is out -- borrowing for graduate education often doesn't pay out!
Retail sales in April and May declined, and forecasters don't expect much bounce when June data are released later this month. Businesses are more cautious about investing in new facilities and adding workers, because consumers are so tight fisted, a prolonged recession in Europe seems likely, and the Chinese economy is weakening.