Positive signs in the economy?

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Updated: August 7, 2009 - 10:51 PM

The unemployment rate even fell slightly, though it resulted from workers who gave up finding jobs. The U.S. lost 247,000 jobs last month, fewer than economists expected.

The pace of job cuts around the country slowed last month -- the latest signal that the longest downturn since the Great Depression is easing.

But don't fire up the marching band yet, economists say, because the country isn't expected to actually add jobs for some time, and the healing process could feel like a one-handed mud wrestle.

"It's a long way from being where we want to be," said state economist Tom Stinson. "But it's the best news we've had on the jobs front for some time."

The news sparked plenty of blogger and pundit chatter, and excited investors sent the Dow Jones Industrial Average and S&P 500 to their highest closes in nine months.

The United States lost a net 247,000 jobs in July, according to the monthly employment report the government released Friday. That's a lot of pink slips. But it is less than many economists anticipated and about half what it was just a few months ago.

And for the first time in 15 months the nation's unemployment rate actually went down, to 9.4 percent from 9.5 percent, although much of the decline was due to people leaving the workforce.

The July numbers are at least a step in the right direction, economists say.

"It's like, take a deep breath and hope that the positive things continue," said Heidi Shierholz, a labor economist at the Economic Policy Institute (EPI), a liberal think tank in Washington.

Shierholz attributed much of the improvement to the American Recovery and Reinvestment Act, the stimulus package pumping more than $700 billion into the U.S. economy.

But Stinson thinks it's too early for those effects to be showing up. Minnesota, for instance, has received less than $1 billion of the $3.8 billion in stimulus funds earmarked for it, according to the latest government estimates.

Minnesota has largely been tracking the nation in terms of job losses slowing since last year, Stinson said. But June was another tough month for the state. Employers slashed a net 16,000 positions and the unemployment rate rose to 8.4 percent, he said. Stinson said he's not sure what Minnesota's July numbers, due out in two weeks, will look like. He doesn't expect Minnesota or the rest of the country to start growing jobs again until later next year.

422,000 give up

Labor market pains are expected to worsen before they get better. President Obama said Friday that he still expects the nation's unemployment rate to hit 10 percent. The July unemployment dip was not because of new Help Wanted signs but largely because 422,000 people left the labor force, analysts said. That's a large decline, and more than half were adult men, said Shierholz.

"The timing of this is extremely suggestive that these are people who looked around and said 'I'm not going to knock on that door one more time. They don't have jobs,'" she said.

Not everyone is giving up. The number of workers who have been out of work for more than six months but are still searching swelled by 584,000 to 5 million -- or about one-third of the country's total unemployed, according to EPI.

Shierholz said that is the most long-term unemployed since the government started keeping records on it in 1948.

"This is one area where this recession is just shattering everything," she said.

Despite the toughest job market in decades, Jody Hawkins is determined to score work. An energetic 39-year-old in North Minneapolis, Hawkins lost his job as an educational assistant at a Minneapolis elementary school in the winter of 2008. He went back to college and is finally finishing the 20 credits he had been short for many years. He got tuition assistance from Hired, a Minneapolis-based employment training agency that contracts with the state.

Hawkins expects his diploma by the end of the month. He has retooled his résumé, attended a job fair and is focused on finding a job working with children or young adults. Yes, it's a tough job market, he said. But he is excited to finally have his bachelor's degree and said he is eager for the new challenge.

"If I can get an interview, I just feel confident enough in myself that I'll get the job," Hawkins said. "I don't have an "S" on my chest. I'm just motivated to be better tomorrow than I am today."

Jennifer Bjorhus • 612-673-4683

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