by Danielle Kurtzleben

The U.S. unemployment rate has increased for three straight months

The nation's hopes were high in part on a report from payroll accounting firm ADP that the private sector added 157,000 jobs in June, as well as Labor Department reports of a decrease in new filings for unemployment insurance. But the official unemployment report dashed those hopes, as the Labor Department announced that the unemployment rate had grown for the third straight month, inching up one-tenth of a percent in June to 9.2 percent.

Equally distressing, the total number of new jobs created in June was a paltry 18,000, the government reported, with government, finance, and construction continuing to be a drag on job growth. Most of the 57,000 new private sector jobs were offset by the loss of 39,000 public-sector jobs. Major gains came in leisure and hospitality, with 34,000 jobs added, and there was also growth in healthcare and manufacturing, which added 13,500 and 6,000 jobs, respectively. Many economists agree that to bring about meaningful shifts in unemployment, the economy must regularly add more than 300,000 jobs per month. Just to stay even with population growth, the economy must create 100,000 to 125,000 new jobs a month.

Speaking in the White House Rose Garden today, President Obama acknowledged the pain that the 14.1 million unemployed Americans are facing. "Today's job report confirms what most Americans already know: We still have a long way to go and a lot of work to do to give people the security and opportunity that they deserve," he said, acknowledging that there is still "a big hole to fill" after the recession cost the economy more than 8 million jobs.

For Obama, relief on the job front is quickly becoming a major political headache with the 2012 president election now 16 months away. The issue is clouded with ongoing negotiations over the debt ceiling, as many proposals envision a sharp cutback in federal spending and presumably government jobs. There is no doubt that the jobs situation is far from ideal, or even adequate. Yet there may be reason for optimism buried in today's numbers. Joel Naroff, president of economic consulting firm Naroff Economic Advisors, says that the increase in leisure and hospitality jobs, as well as a small jump in retail hiring, imply that consumer spending at stores and restaurants is picking up as well. "If people are spending that money, are they really that depressed? Is the economy really that slow?" says Naroff. He says that these figures might foreshadow future job growth as well. "Employment is a lagging indicator. Businesses don't see someone buying something and then run out and hire. The long-running trend is that we're coming off the soft spot," he says.

Shortly after the government released today's numbers, the political gamesmanship began. House Minority Leader Nancy Pelosi accused Republicans of doing too little on jobs and "failing to offer a clear jobs plan." She contrasted the GOP's actions with those of her party: "Democrats have forced 10 votes on job-creation measures in this Congress -- and Republicans have voted 'no' each time," she said in a statement.

House Majority Leader Eric Cantor meanwhile used the numbers as further ammunition in the ongoing debt-ceiling fight, telling reporters at a Friday-morning press conference that flagging jobs numbers bolster the Republican argument against raising taxes. "If you look at the jobs report, the results of current policies, and where we are in this economy, that is why the Biden talks had to end," he said, referring to June's failed bipartisan deficit-reduction talks.

All the politicking is certainly not surprising, but may ultimately be harmful to the economy, says Naroff. The best thing that Washington politicians can do at this point, he says, is to "go home" and "keep [their] mouths shut," rather than fighting, hurting consumer confidence. "By arguing, the discussion has nothing to do with economics. All they're doing is raising anxiety, all they're doing is playing games."

For his part, the president in his remarks offered a list of more concrete measures that Congress could pass "immediately" to spur job creation, including infrastructure investment, patent reform, and free-trade agreements.

 

Job Growth Dismal, Unemployment Hits 9.2 Percent in June