Where are the jobs?
Economist sees "the mother of all jobless recoveries"
Tom Stundza -- Purchasing, 10/22/2009 11:03:08 AM
The number of people filing for first-time unemployment benefits surged to 531,000 in latest week, Labor Department reports, supporting the view of economists that employers are continuing to pare jobs. Labor say jobless claims increased 11,000 from the previous week when the revised figure was 520,000.
"Given the uncertain outlook in the economy and credit conditions, firms are reluctant to hire," economist Mark Gertler of New York University tells The Wall Street Journal.
He and other economists say many businesses are holding off the formulation of hiring plans, even as the economy begins to improve. The newspaper suggests companies are trimming labor needs by focusing on efficiency and increasing productivity.
Still, "if we don't have job growth, we can't have a strong, or even sustained economic recovery," chief economist Stuart Hoffman at PNC Financial Services tells CNNMoney.com. "But, it's not unusual for profits to head up before employment does, particularly when you have strong productivity growth."
That's all well and good. But as long as people are still losing their jobs, worried about losing their jobs or having difficulty finding a new job, economists admit it's hard to fathom how the recovery can be anything more than tepid.
The jobless rate was 9.8% nationwide in September. And according to figures released by the Labor Department this week, 15 states had an unemployment rate above 10% last month. What's more, the unemployment rate was higher in 23 states in September than in August.
The moribund state of the job market is one reason why Allen Sinai, chief global economist at Decision Economics, writes in a report to clients that the U.S. may be on the verge of "the mother of all jobless recoveries."
"Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance," Sinai writes. "The number of job seekers is way, way up and the number of job openings is way, way down."
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