Democrats are saying it’s looking good; Republicans are insisting nothing’s looking good in the economy, courtesy of the Obama Administration. The number of Americans applying for unemployment benefits edged up slightly last week; however, they’ve remained at a level consistent with modest gains in hiring.
It’s not enough to suggest a trend, but it’s a start – well, depending on who you ask. The numbers for last week were released by the Labor Department on Thursday.
Not as volatile as the monthly numbers, many saying looking at the bigger picture tells the tale. That tale being a combination of steady trends in lower unemployment applications, indications that American companies are hiring again and laying off fewer people and, of course, the monthly numbers for July, which fell by 5,500 to 363,750. That was the lowest level since late March. A senior economist for BMO Capital Markets, Jennifer Lee, said,
Claims so far in August have declined moderately compared to July, suggesting some improvement in the U.S. job environment. And that’s good news.
Economists also say it will take several weeks of drops in unemployment – possibly into the fall-before they’re convinced the jobs situation has turned the corner. Still, it’s not good for the Obama Administration – especially if it does take a few months to “level out” as some are insisting will happen. The U.S. lost 4.3 million jobs in President Obama’s first 13 months in office and if nothing changes before election day, it could be he finds himself as a one-term president. Republican presidential hopeful Mitt Romney is counting on those numbers working to his advantage.
Ultimately, the August unemployment rates will be a better snapshot. The unemployment rate was 8.3% at the end of July, even though businesses reported hiring 163,000 new employees. The fact is, the job market really hasn’t gained any significant momentum – and it’s unlikely to change this year, despite those economists that are more hopeful.
No Credit Card Swiping
People are reining in their spending and not swiping their credit cards, either. Many say this slower growth in consumer spending is an ideal measure of both consumer confidence as well as their still-lacking faith in an improving economy. If some economists are saying we could see real change in “several weeks”, there are those economists who insist stronger growth is necessary to create enough jobs to lower unemployment. Those changes will take months – possible even a couple of years.
The economy faces other challenges that may weigh further on growth.
It’s important to not underestimate international considerations. Europe’s financial crisis is expected to slow U.S. exports, which is the last thing American manufacturers need. Every nation that uses the euro has seen their economies falter.
Finally, there still exists the so called “fiscal cliff” that could happen at the end of this year as well. That’s when a slate of tax cuts expire and big spending cuts are scheduled to kick in. If those changes aren’t altered or delayed, recession is a very real possibility.
There should be one more weekly report on unemployment before August numbers are released in early September. Those numbers, along with October’s numbers, are the last “best effort” the Obama camp can use to their advantage. If the numbers are down again, or if they remain stagnant, it could be a Republican takes office in January.
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