May Jobs Report Falls Short Of Expectations
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. I'm Renee Montagne.
MARY LOUISE KELLY, host:
And I'm Mary Louise Kelly.
The verdict on jobs is in. The Labor Department says, in May, the economy added far fewer jobs than expected. The unemployment rate rose from nine percent, to 9.1 percent. Here to discuss the surprise in the report is NPR's Yuki Noguchi. Hi Yuki.
YUKI NOGUCHI: Hello.
KELLY: So, this is being described as a very weak jobs report. Is that a fair way to describe it?
NOGUCHI: Oh yeah. The biggest surprise - that there were only 54,000 net new jobs in May. By comparison, over the previous three months, the job gains were more than four times that. So that's a huge pull back. Economists were expecting a lower number, but not this low. And the people who watch these things closely, started getting a little more pessimistic when they saw weakness in the data that came out earlier this week. I mean, they saw falling housing prices, manufacturing in a slump, consumers losing confidence. And so, you know, they had revised numbers - but not this low.
KELLY: So, what are the factors at play here? I mean, how do we explain - how do we explain these surprisingly bad numbers?
NOGUCHI: Well, I mean, this is going to sound like circular logic, but to some extent this is a bad feedback cycle. Economic growth has been slow - a lot slower than you'd expect in a normal recovery. And part of that, right now, is that there's a spike in oil prices and that has a big financial and psychological affect on people and on businesses. It makes them think twice about spending.
But really, now the question is, are the numbers we're seeing today just a blip or do they indicate some longer term drag on employment. You know, some people worry about a possible dip back into recession - what in the past we might have called a double dip, or at this point, a triple dip. But a more optimistic view is that this is just temporary - a rough patch along the way to a more solid recovery. So, in addition to higher oil prices, you know, we also had that earthquake in Japan which is disturbing supply chains for automakers and computer-makers. And so, all of that is, sort of, adding up.
KELLY: Well, so help us understand what's happening here. Because the government had, of course, been trying to stimulate hiring. I mean, the fed has been trying to make borrowing cheaper. There were tax breaks that the government was giving out to individuals. Now they're talking about spending cuts.
NOGUCHI: Yeah, that's right. So there's almost certainly going to be less government spending. And so what that means is that the growth is going to have to come organically, you know, from consumers feeling confident and spending, and then business responding to that by hiring to, sort of , fill the demand.
KELLY: And the unemployment rate inching up again, that can't be helping things?
NOGUCHI: Oh, definitely not. I mean, it's technically not significant to the economy. I mean, a change of a tenth percent is not economically significant, but it is a confidence killer. And that's kind of what we're talking about here. It's just trending in the wrong direction.
KELLY: Are these, kind of, um, you know, blip - whether it's a blip or a long term trend - is this in line with what we would normally see in an economic recovery?
NOGUCHI: No. This is not your typical recovery. It's much more sluggish. I mean, the recovery officially started, this month, two years ago. And yet, your average household is just really, not feeling that.
The fact is, that even when the hiring was happening at higher levels in previous months - which, again, we're not seeing anymore - it just wasn't enough to put millions of people back to work quickly.
KELLY: OK, thanks very much, Yuki.
NOGUCHI: Thank you.
KELLY: That's NPR's Yuki Noguchi.
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