`Growth Recession' Is Keeping Unemployment High, Weinberg Says: Tom Keene
The U.S. economy is in a “growth recession” that is keeping unemployment high, according to Carl Weinberg, chief economist at High Frequency Economics.
“We’re certainly off the nadir of the economy last year, but we’re not growing fast enough to create jobs faster than the labor force is growing,” Weinberg said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “We’re in kind of a tough part.”
The jobless rate increased to 9.6 percent in July from 9.5 percent in the previous month, according to the median forecast of 78 economists in a Bloomberg News survey before the Labor Department’s report on Aug. 6. Employers were expected to eliminate 63,000 jobs from nonfarm payrolls in a second consecutive reduction.
The U.S. economy grew at 2.4 percent annual rate from April through June compared with a 3.7 percent pace in the previous three months, the Commerce Department reported July 30.
Economic growth will slow to below 2 percent in the third quarter, according to a forecast from Weinberg’s colleague Ian Shepherdson.
“We’d have to get the economy to grow faster than its potential rate for a sustained period of time,” said Weinberg, basked in Valhalla, New York, on what it would take to reduce unemployment.
Consumer spending, which accounts for about 70 percent of the economy, advanced at a 1.6 percent pace last quarter, compared with a 1.9 percent rate in the previous three months that was smaller than previously estimated.
Bernanke’s View
Federal Reserve Chairman Ben S. Bernanke said in a South Carolina speech on Aug. 2 that rising wages will probably spur household spending in the next few quarters even as weak job gains drag down consumer confidence.
While the U.S. has “a considerable way to go” for a full recovery, “the economy seems to have stabilized and is expanding again,” Bernanke said.
Reports today showed service industries grew in July at an unexpectedly faster rate and U.S. companies added more jobs than economists forecast.
To contact the reporters on this story: Alex Kowalski in New York at akowalski13@bloombeg.net; Tom Keene in New York at tkeene@bloomberg.net
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