Economic Outlook Based on July Results

The majority of U. S. economists believe that the economy continues on a very slow growth path and that the danger of a double-dip recession is not high.   In July, U. S. private companies added 71,000 jobs but total employment fell by 221,000 jobs as more Census workers were laid-off.  June’s private sector employment number was reduced to 31,000 people.  The number of new jobs being added cannot bring down the rate of unemployment because there are more new workers (high school and college graduates) than the number of new jobs added.  

By comparison, California alone would need to add more than 100,000 workers each month just to accommodate the number of new workers.  In July, 71,000 jobs were added nationwide. This has caused many experts to project a rising unemployment rate as more new workers enter the marketplace and some people who have stopped looking for jobs resume the job search.  The “underemployment rate,” which includes part-time workers who would prefer fulltime work, and workers who have given up searching for a job, is 16.5%. Private employment in July was led by gains in manufacturing, education and health services.  Manufacturing payrolls increased by 36,000 in July (about half of the total increased jobs for the month), reflecting a 21,000 rise in employment in the motor vehicles and parts industry.  

Service sector, construction jobs and temporary worker employment declined during the month. 

Construction companies reduced payrolls by 11,000. Economists point to continued strength in industrial raw materials as evidence that the economy is not weakening to the point of slipping back into a double-dip recession.  However, because the unemployment rate will continue to stay high and even rise as people return to the job search, business leaders believe that Washington needs to become more supportive and positive about business. In July, the Business Roundtable, which had previously been seen as largely supportive of Washington’s agenda, changed its position in July sending the White House a 54 page letter explaining why the federal government’s policies were hurting the economy.  

Consumer and business confidence remain low.  Seven in ten Americans believe that the economy is still in recession, and the public is conflicted about joblessness and the federal deficit.  Seven in ten Americans state that reducing the jobless rate is the number one priority.  At the same time, the public has grown very skeptical of budget decision making in Washington (and in some states) with more than half of Americans saying the deficit is “dangerously out of control.”