Jobless Claims Show American Job Machine Sputtering in Recovery
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Almost a year ago, economic strategist Dan Greenhaus of Miller Tabak & Co. told his clients the U.S. economy would recover while job growth would be scarce.
His prediction for a so-called jobless recovery, derided by some clients when he made the forecast last July, may be coming true.
Weekly unemployment claims, a gauge of firings and a predictor of employment growth, are stalled at a level that may signal weak job gains in the months ahead.
Over the last 43 years, monthly job growth averaged about 17,000 when weekly jobless claims were in this year's range of 440,000 to 490,000.
Examining the last 20 years - which included the jobless recoveries of 1990-1991 and 2001 - shows average job losses of 62,000 a month.
''We need to break below 400,000 for sustained solid job creation,'' said David Rosenberg, Gluskin Sheff & Associates Inc. chief economist via e-mail.
The U.S. appeared to be on pace to break the 400,000 mark earlier this year. Yet that improvement has stalled.
Weekly jobless claims fell 30% from March 2009 to the end of December, presaging smaller job losses and employment growth in the first half of this year.
Yet, claims since then are stuck in a range of 440,000 to 490,000 this year.
''To get the unemployment rate going down you need 200,000 plus job growth,'' said Mark Zandi, chief economist with Moody's Analytics. ''If that doesn't happen by the end of the year, then this will go down as another jobless recovery.''
This week's employment report may move the U.S. further away from hitting Zandi's job growth target.
Non-farm payrolls will fall 125,000 while the unemployment rate rises to 9.8% when the monthly employment report for June is released on July 2, predicted economists surveyed by Bloomberg News.
"We're in danger of facing a recovery in which job growth is taking place but not sufficient to offset the amount of job losses in the recession," said Bruce Kasman, chief economist at JPMorgan Chase & Co.
If payrolls grow an average of 100,000 a month, it would take six years for the U.S. to return to the peak in employment of 138 million people set in December 2007.