Jobs Numbers May Point To Faltering Recovery
ROBERT SIEGEL, host:
From NPR News, this is All Things Considered. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris. And we begin this hour with the latest jobs report - in a word, disappointing. The unemployment rate ticked up to 9.1 percent. That's because, according to the Labor Department, employers added just 54,000 in May. Not long ago, the economy was adding 200,000 jobs a month.
NPR's Chris Arnold reports on the latest numbers and why they suddenly went south.
CHRIS ARNOLD: Right now, there are 13.9 million Americans looking for work, so adding 54,000 jobs in a month, that doesn't get you very far. Economists had been expecting three times more job growth in May.
Mr. RANDALL KROSZNER (Economist, University of Chicago): Well, clearly this is a disappointing report.
ARNOLD: Randall Kroszner is an economist at the University of Chicago. He's also a former governor of the Federal Reserve board, so he pays close attention to where the economy's headed.
Mr. KROSZNER: The private sector is not continuing to generate jobs at the rate that we thought it was.
ARNOLD: So most people probably want to know, though, just how bad is that? Okay, and how disappointed were you? I mean, you know, when you saw 54,000, did you grab you head and, you know, moan or was it, like, oh, you know, okay, guess that's a little worse than expected, you know?
Mr. KROSZNER: We should never overreact to any one number. And even though the previous numbers were revised down a bit, this is not a sea change, this is a disappointment. But we still have reasonably good job growth the previous two months, so we shouldn't put our heads in our hands yet.
ARNOLD: Still, President Obama today acknowledged the obstacles to job growth.
President BARACK OBAMA: Even though the economy's growing, even though it's created more than two million jobs over the past 15 months, we still face some tough times. We still face some challenges.
ARNOLD: The president was speaking at a Jeep Chrysler factory in Toledo, Ohio and he used several auto and truck and jeep metaphors to explain the situation, some with varying degrees of success.
President OBAMA: We're gonna pass through some rough terrain that even a Wrangler would have a hard time with. We know that. Wrangler can go over anything, huh?
ARNOLD: As far as why last month saw such weak job gains, there are several reasons, actually. Rising oil prices could have made employers nervous about the future. There have been ongoing financial problems in Europe. Also, Kroszner says, there was that huge earthquake and tsunami.
Mr. KROSZNER: The tragedy in Japan, people seem to forget that Japan is still roughly the second largest economy in the world and effectively the economy shut down for a very long period of time.
ARNOLD: Kroszner says that many U.S. companies need Japanese-made parts and some suffered slowdowns. And after gaining jobs in recent months, the manufacturing sector all together lost 5,000 jobs in May.
Professor JOHN GRAHAM (Duke University): To me, the ultimate question here is, is this a temporary lull or have we kind of taken another downward turn?
ARNOLD: John Graham is a finance professor at Duke University and he heads up a quarterly survey of top financial officers at a thousand different companies.
Prof. GRAHAM: We just closed the survey at about 6:00 a.m. this morning. Two things jump out at me.
ARNOLD: Graham says, first, nearly half of all companies say that they're either actively hiring more workers or they would like to hire.
Prof. GRAHAM: I mean, I think that's a pretty positive situation. Only about 10 percent said they felt they were overstaffed right now.
ARNOLD: Also, Graham says for current workers, a surprising number of companies, 61 percent, said that by the end of the year, they'll be restoring work hours to pre-recession levels. Many are also restoring matching 401(K) retirement contributions.
Prof. GRAHAM: Which I think is a really good thing. I'm kind of surprised in a positive way that companies are restoring benefits more rapidly than expected.
ARNOLD: And Graham expects to see more job growth, but he thinks it'll still be at a pretty sluggish pace. He thinks it'll take two years to get the jobless rate below eight percent, so unemployment promises to be a central issue in next year's presidential election.
Chris Arnold, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.