Economic Forecasts

Dreary Unemployment Picture to Brighten

Job losses in July were expected. The question is what’s ahead for the rest of the year.

The forces dragging down job growth in recent months should abate in the second half of the year. Housing will emerge, gradually, from its post-tax-incentive pothole. Already reinstated are jobless benefits for the long-term unemployed, which disappeared in June and remained unavailable through July as Congress dallied on an extension. Plus concerns about the European financial crisis have diminished, though risks still loom.

By the fourth quarter, look for monthly net job growth of around 150,000 as the pace of economic expansion picks up later this year.

Downsizing of the decennial Census-related workforce more than accounts for the net loss of 131,000 jobs in July, following an even larger loss of 221,000 during June. But job gains elsewhere are negligible, and the job market recovery remains anemic. Earlier in the year, Census hiring ramped up steadily to 564,000 temporary workers by May. Two-thirds of those positions have since been shed. The Census drag will persist through year-end, but the bulk of downsizing will be over by September.

To get a better reading on underlying trends, the ex-Census tally is a better place to look, and the results here are not inspiring. After posting solid gains averaging 203,000 in March and April, private and non-Census government hiring over the past three monthly advances averaged just 13,000 -- not losses, technically, but just barely.

Even the lack of an expected tenth-of-a-point increase in the 9.5% jobless rate isn’t especially encouraging, since it entirely reflects a drop in job seekers. With the expiration of jobless benefits for the long-term unemployed, workers lost their eligibility for the program and, with it, some incentive to describe themselves as “looking for work.” Hence, they appear to drop out of the labor force. With the reinstatement of benefits in August, these workers are likely to reappear as new job seekers, lifting the jobless rate this month.

On the whole, the job market slowdown mirrors developments in the economy at large. The year began with strong housing market gains and vigorous manufacturing activity, as firms hustled to replenish depleted inventories. Consumers also stepped up with heavy demand for energy efficient appliances, and rushed those purchases to beat the April 15 tax filing deadline. As tax incentives faded and unemployment benefits expired, economic activity waned in recent months, and job weakness is the result. Uncertainty surrounding the European financial crisis didn’t help, either, elevating uncertainty and scaling back risk-taking of all sorts, including payroll expansion.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy still in trouble, tax policy takes on added importance in the 2020 election. So, let's take a look at what Joe Biden wants to do abou…
October 22, 2020
PPP Loan Forgiveness Applications are Now Easier
Coronavirus and Your Money

PPP Loan Forgiveness Applications are Now Easier

Small businesses that received PPP loans of $50,000 or less can now apply for forgiveness using a simplified application form.
October 16, 2020
The Most Expensive Natural Disasters in U.S. History
Economic Forecasts

The Most Expensive Natural Disasters in U.S. History

Wind, water, fire and drought have all wreaked havoc on the United States. What’s been the worst?
August 26, 2020
Vote by Mail: A State-by-State Guide to Absentee Ballot Voting
Politics

Vote by Mail: A State-by-State Guide to Absentee Ballot Voting

With health authorities recommending people continue to social distance, the idea of voting by mail is becoming an increasingly hot topic.
August 4, 2020