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‘Ominous Signs’ Loom Over US Economy — And Workers Still Struggle

Reprinted with permission from Alternet.

President Donald Trump hasn’t been shy about citing economic data, pointing out how much unemployment has decreased in the U.S. and insisting that he is responsible — never mind the fact that unemployment was already down to 4.7 percent in December 2016, President Barack Obama’s last full month in office. Trump inherited an economic recovery; he didn’t create one singlehandedly.

But while the 3.7 percent unemployment rate the Bureau of Labor Statistics (BLS) gave for June is certainly an improvement over the financial misery and devastation that Obama coped with in 2009 and 2010 during the worst of the Great Recession, there are some troubling signs in current economic data — and those signs are examined in recent articles published by the Washington Post, the New York Times, and Bloomberg News.

Sen. Elizabeth Warren and Sen. Bernie Sanders have both been complaining that most of the economic gains of the Trump era have gone to Americans at the top — and Heather Long, in the Washington Post, notes that 40 percent of Americans still say they are struggling to pay their bills. Long notes that although the “stock market is at record levels” and the current “economic expansion” is the longest in U.S. history, this is a “two-tier recovery.”

And the lower tier, according to Long, is seeing “paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt.”

Long observes that according to Matthew Mish (head of credit strategy for the investment bank UBS) the 40 percent of Americans Mish considers the “lower tier” is struggling to make ends meet.

Neil Irwin, in the New York Times, cites some good news: “Employers added a robust 224,000 jobs, the Labor Department said, up from a revised 72,000 in May.” But Irwin goes on to cite some bad news as well — for example, Irwin writes, “average hourly earnings have risen only 3.1 percent over the last year.”

Irwin reports, “Even as low as the unemployment rate is, employers don’t seem to be bidding up the wages to get workers.” The Times reporter stresses that although “the American job market is steady and solid,” wages aren’t increasing enough for “the average American worker.”

He also noted the financial markets are sending “ominous signs about the global economy.”

The Great Recession was the worst economic downturn since the Great Depression of the 1930s. When Obama was sworn in as president in January 2009, he inherited the worst economy of any president since Democrat Franklin Delano Roosevelt (who took office in 1933 after his landslide victory over Republican incumbent President Herbert Hoover in 1932).

The Great Recession left millions of Americans financially scarred. And Karl W. Smith (a former economics professor at the University of North Carolina) explains in Bloomberg News that although “the job market is still going strong,” the U.S. economy still isn’t “fully healed” in 2019.

“For most workers,” Smith warns, “wages are rising only modestly. That implies there has been an ample supply of people outside the job market who can be pulled back in not because they are being offered more money, but because now, employers are giving them the opportunity.”

In other words, those workers are being underpaid, but being underpaid is a step up from the extended unemployment of the Great Recession.

“The job market is still going strong,” Smith reports. “But until we see labor’s share of income rising and increasing numbers of people choosing work over school and retirement, the job market won’t be fully healed.”

IMAGE: Fast-food workers and their supporters join a nationwide protest for higher wages and union rights outside McDonald’s in Los Angeles, California. REUTERS/Lucy Nicholson

 

 

 

Will Wage Growth Be Trump’s Great White Whale?

IMAGE: An electoral poster of Donald Trump is displayed on the floor of the New York Stock Exchange (NYSE) the morning after the U.S. presidential election in New York City, U.S., November 9, 2016. REUTERS/Brendan McDermid

U.S. Adds Surprisingly Strong 295,000 Jobs, But Wage Growth Slows

By Jim Puzzanghera, Los Angeles Times (TNS)

WASHINGTON — U.S. employers shook off some severe winter weather and added a surprisingly strong 295,000 net new jobs in February while the unemployment rate fell to a post-Great Recession low of 5.5 percent, the Labor Department said Friday.

The jump in job creation exceeded economists’ forecasts and was an improvement over January’s 239,000 jobs. But the increase was offset somewhat by a downward revision in December’s and January’s figures by a total of 18,000 jobs.

Wage growth continued to be slow last month. Average hourly earnings rose by just 3 cents to $24.78 after an encouraging 12-cent increase in January.

For the 12 months ended Feb. 28, wages rose by only 2 percent, well above the low inflation rate but not nearly the level economists would like to see coming out of a deep recession.

Part of the reason the unemployment rate fell to its lowest level since May 2008 was that about 178,000 job-seekers dropped out of the labor force. That caused the labor force participation rate to tick down by a tenth of a percentage point to 62.8 percent, near a more-than-three-decade low.

Still, job growth has been strong over the past year. February was the 12th straight month in which the nation added at least 200,000 net new jobs, the best streak since 1994-95.

Job growth has averaged 266,000 during that period. The pace has improved recently, with the economy averaging 288,000 net new jobs from December through February.

“There has been no significant impact from the winter weather during the month,” said Gad Levanon, managing director for economic outlook and labor markets at the Conference Board. “As expected, the lower oil-price level is beginning to shrink employment in the mining industry, but it is not large enough to make a significant dent in the total number of jobs.

Employment by oil and gas extraction companies fell by 9,300 jobs in February from the previous month, the Labor Department said.

The construction industry added 29,000 net new jobs, while factory payrolls increased by 8,000. Restaurants and bars added 59,000 net new jobs, and firms offering professional and business services increased their payrolls by 51,000.

Health care providers added 24,000 net new jobs.

Some economists were concerned that severe winter weather last month might have slowed the labor market recovery. A major snowstorm hit the Northeast in mid-February, the same week that the Labor Department surveys households and employers for the jobs report.

Initial jobless claims rose last week to 320,000 — the highest level since May — and payroll firm Automatic Data Processing reported this week that private-sector job growth slowed to 212,000 in February from 250,000 the previous month.

Despite the winter weather, nearly 70 percent of respondents in a survey by the nonpartisan Pew Research Center said they believed the job situation had begun recovering. Less than half thought that was the case in September 2013.

But slow wage growth remained a big concern. About 30 percent of poll respondents said their personal finances had yet to recover from the Great Recession.

AFP Photo/Andrew Burton