The jobless rate may rose for a second month since the recovery failed to generate enough jobs while the labor force is growing bigger everyday. Although companies added 77,000 workers to payrolls, the unemployment rate still climb from 9.6 percent in August to 9.7 percent in September.
The result has somewhat lead to the restraining consumer spending and underscores. Add to that, the Fed concerned the rebound from the worst recession since the 1930s has been to slow to develop. The economists surveyed by bloomberg project unemployment will stay around 9% through 2011.
The forecast gain in payrolls excluding government agencies would follow an increase of 67,000 in August. Companies had created an average of 200,000 a month in March and April before growth weakened. The world’s largest economy grew at a 1.7 percent annual pace in the second quarter compared with 3.7 percent in the first three months of the year and 5 percent at the end of 2009, according to Commerce Department data.
I am a little surprised that the unemployment rate has not dropped at least a little since August, and am even more surprised to see that they are forecasting a consistent unemployment rate through 2011. I would think that with the drop in wages and more opportunities to work that the unemployment rate would drop. The constrain in consumer spending may be an early indicator to a possible increase in inflation, and the drop in wages because of more hired work from the companies does not help the situation. On the other hand the consistent unemployment rate is not surprising partly due to the possible drop in wages. If wages drop, the more likely a person is to quit their job and start looking for another one.
ReplyDeleteStill with Frictional and Cyclical Unemployment, these numbers should not be that high. This is scary because we are still above Natural Unemployment. I think another stimulus should be implemented- Expansionary Monetary policy even.
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