jobsearchnewspaper.jpgFriday’s news from the federal government’s Bureau of Labor Statistics about the U.S. employment situation in May sent shock waves through Capitol Hill and the White House.

Economic growth appears to be stalling as reflected in the jobs data—only 54,000 new jobs created nationwide in May; the unemployment rate up to 9.1% of the labor force; and almost 14 million Americans out of work.

Beneath the headline data was another significant barometer of economic weakness: the number of people classified as “long-term unemployed ,” i.e., those out of work for longer than 26 weeks, increased by 361,000 in May to 6.2 million people, fully 45 percent of the unemployed. Read more.

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Jobs Report: Economy’s Momentum Slowing?

Wed Jun 8, 2011

jobsearchnewspaper.jpgFriday’s news from the federal government’s Bureau of Labor Statistics about the U.S. employment situation in May sent shock waves through Capitol Hill and the White House.

Economic growth appears to be stalling as reflected in the jobs data—only 54,000 new jobs created nationwide in May; the unemployment rate up to 9.1% of the labor force; and almost 14 million Americans out of work.

Beneath the headline data was another significant barometer of economic weakness: the number of people classified as “long-term unemployed ,” i.e., those out of work for longer than 26 weeks, increased by 361,000 in May to 6.2 million people, fully 45 percent of the unemployed.

After April’s robust increase of 232,000 new jobs, the May numbers were a huge disappointment, not only for job seekers but for policymakers in Washington DC as well.

To be sure, we can take a bit of reassurance from the knowledge that the monthly BLS jobs numbers are notoriously volatile. Perhaps April’s big increase “borrowed” some jobs from May. And the June data to be released in early July could show a bigger up-tick in new jobs.

Nevertheless there’s little doubt that U.S. economic growth right now is too weak to generate enough new jobs to reduce the unemployment rate much below 9 percent.

The big question for Washington policymakers is whether to stand pat and hope the economic engines crank up more RPMs on their own or intervene with more stimulative monetary and fiscal policy.

In a sense policymakers have run out of bullets to fight slow economic growth. The Federal Reserve this month is winding down its $600 billion “quantitative easing” policy known as “QE-2.” Not wanting to spark inflation with excessive money creation the Fed is not likely to open up a new round of easy money. Similarly, Congress, facing mammoth budget deficits for years to come and at odds over raising the public debt ceiling above the present $14 trillion, is not likely to support even bigger deficits in hopes of jump-starting the economy.

So Washington waits—and hopes—for the economy to pick up speed and generate new jobs at a faster clip. With all the monetary and budgetary stimulus that has been applied in the last couple of years one would expect stronger economic growth. What the unemployed and the under-employed would like to know, of course, is when?