Investors waited in eager anticipation for the most important economic release of the month: The August Jobs Report. With Saturday marking the 200-day anniversary of the American Recovery and Reinvestment Act, the United States continues to lose jobs amidst the worst economic downturn since the Great Depression. And, today’s report proved no different.
The Wall Street consensus was expecting a loss of 230,000 jobs in August, compared to a loss of 250,000 in July. The unemployment report was forecasted to tick up by 0.1% to 9.5%. The official Labor Department report painted a different picture.
Actual job losses in August totaled 216,000, but there were an additional 49,000 jobs reported lost in the revisions for June and July. This pushed the unemployment rate to 9.7%, the highest rate in the United States since June 1983. Year-to-date, total job losses in the country now total 3.851 million. There are now 14.9 million Americans out of work.
Critics of the $787 billion stimulus package are questioning the validity of the package since companies continue to eliminate positions rather than hire new workers.
“The Democrats’ rhetoric on their economic experiment doesn’t match with the reality of millions of Americans remaining unemployed,” said Republican Party chief Michael Steele to the Associated Press. “The stimulus was an economic experiment that failed Americans.”
Vice President Joe Biden defended the stimulus package Thursday against Republican critics who say it is too costly.
“The recovery act has played a significant role in changing the trajectory of our economy, and changing the conversation in this country,” Biden said. “Instead of talking about the beginning of a depression, we are talking about the end of a recession.”
Still, though, any job growth seems to be focused on only two sectors: healthcare and, no surprise, education, due to seasonal hiring. Construction and manufacturing continue to decline; both sectors each eliminated over 60,000 jobs last month.
The feeling of many economists is the U.S. will continue to shed jobs for the remainder of 2009, even as the economy continues to crawl out of the worst recession in 70 years.
David Rosenberg, chief economist at Gluskin Sheff & Associates said in an interview on Bloomberg radio: “What we’re learning is that the pace of job declines is subsiding. The economy is no longer detonating, but we are still losing jobs, and the unemployment rate is going up. It’s going to be a very tough environment for the consumer.”
The only upside surprise from the Labor Department’s report was the average hourly earnings rate jumped 0.3% in August; consensus was looking for an increase of 0.2%. But this data only proves that adjustments will continue to be made with personnel in regards to pay and productivity, until companies begin to add to their payrolls.
“We’re still going to see some months of job cuts,” said Brian Bethune, chief financial economist at IHS Global Insight, to Bloomberg. “There is a whole range of options, like adding shifts or hours that companies can put in place until it becomes necessary to hire people back.”
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