The unemployment rate is what is holding down the US economic recovery. It’s such a problem that although the unemployment rate fell from 9.7 percent in May to 9.5 percent in June, more jobs had to be cut than were created. Within the jobs report, the stats were skewed by jobless Americans out of the labor force. The stock market, accepting the numbers at face value, rose slightly Friday morning. Soon after a large decline in factory orders was reported at 10 a.m., the Dow Jones Industrial Average lost 32.5 points. A lot of conflicting details has been within the US economy. Even as job creation, factory orders and consumer confidence fell, many of the manufacturing companies that want to hire can discover workers with the kind of skills they need.

Post resource: Unemployment rate down, job loss up, factories hire, what gives by Personal Money Store

Consumer confidence, unemployment, and every little thing else

The whole economy is affected by the unemployment rate. An uncertain employment picture wreaks havoc on consumer confidence, which went down a lot in June. The decline in consumer confidence led to a decline in auto sales, and pushed pending home sales off a cliff as tax credits for home buyers expired very quickly. Consumer spending makes up around 70 percent of the U.S. economy, and disposable income is a distant memory for millions of jobless workers.

Why the unemployment rate dropped:

The unemployment rate reached its lowest point since July 2009. But it was reported by the Wall Street Journal the decline wasn’t due to improvement in the labor market. A loss of 125,000 jobs should have increased June's unemployment rate. But 652,000 individuals gave up looking for a job -- the sharpest one-month decline in 15 years within the Labor Department’s survey. Some might be choosing other possibilities like school. Some are reaching the end of their unemployment benefits, which require an active job search. 1 million individuals stopped looking for work in the last 2 months.

For unemployed workers, new jobs don’t fit them

The unemployment rate remains stubbornly high because people are still applying for the jobs. According to the New York Times, the problem is a mismatch between the kind of skilled workers needed and the ranks of the unemployed. During the recession, domestic manufacturers accelerated the long-term move toward more automation, laying off their workers that weren’t very skilled and replacing them with cheaper labor abroad. Now these companies need to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math skills than old-school assembly line workers.

A jobs report and silver lining?

One must dig deep to find some positives about the latest jobs report. The Washington Post reports that Friday's jobs report could mean the economic recovery that began last year has lost momentum, but the numbers aren't so bad as to suggest the nation is heading into a double-dip recession. The US economy is falling according to the numbers. The job growth number is a decline from stronger levels in March and April, but the June job creation number of a mere 83,000 is better than any month out of the past 31, other than the last two.

Citations:

New York Times

nytimes.com/2010/07/02/business/economy/02manufacturing.html?_r=1&ref=us

Wall Street Journal

blogs.wsj.com/economics/2010/07/02/why-did-the-unemployment-rate-drop-2/

Washington Post

washingtonpost.com/wp-dyn/content/article/2010/07/02/AR2010070202004.html?hpid=topnews