July jobs report: Why the unemployment rate just won’t budge

August 3, 2012

The U.S. economy added 163,000 jobs in July, according to data from the Bureau of Labor Statistics. And the unemployment rate stayed essentially unchanged, even nudging up slightly from 8.2 percent to 8.3 percent (actually, if you want to get technical, it went from 8.22 percent to 8.25 percent).


(Justin Sullivan/Getty)

The bright spot here is that the job market isn't getting dramatically worse. Those 163,000 new jobs were more than forecasters expected. July's jobs figures were also much better than the disappointing reports in May and June. The more troubling news, however, is that the economy isn't getting dramatically better, either.

This has been the case for quite some time: In the first seven months of 2012, the economy has added 151,000 jobs per month on average. That's on par with 2011, when the economy added an average of 153,000 jobs per month. That's enough to keep up with the growth of the U.S. population. But it's not enough to bring down the unemployment rate dramatically. According to the Hamilton Project's jobs calculator, if we keep adding 151,000 jobs per month, on average, we won't return to pre-recession levels of employment until after 2025.

Some other points of interest in the report: BLS revised its numbers slightly for previous months. The figures from May got revised up from 77,000 new jobs to 87,000. And June's numbers got revised down, from 80,000 to 64,000.

Meanwhile, some sectors of the economy showed signs of growth. Manufacturing added 25,000 jobs last month. The automobile industry had fewer layoffs than usually occurs at this time of year. The professional and business services sector added 49,000 jobs in July. Leisure, hospitality, and food services also saw a bump, with 29,000 new jobs. Meanwhile, hospitals and outpatient care sectors continued to hire new workers.

But many of the bleakest aspects of the jobs market haven't changed a bit. There are still 5.2 million Americans who have been out of work for more than 27 weeks. There are still 8.2 million Americans who have to settle for part-time work, either because their hours were cut back or because those are the only jobs they could find. And the size of the labor force, which includes everyone who either has a job or would like one, hasn't budged much.

So the U.S. economy keeps plodding along. And there's little reason to think that trajectory will change drastically anytime soon. The rest of the global economy is limping along, with the debt crisis in Europe rippling out to other countries (including the United States). And policymakers in Washington D.C., for their part, appear to be largely complacent about mass unemployment.

Congress, for its part, isn't expected to pass any further policies to bolster the economy before the November elections. And Federal Reserve officials are still poring over data, watching and waiting. The central bank will meet again in September to decide whether to take further action to try and stimulate the economy (say, another round of quantitative easing). Jobs reports from July and August will weigh heavily in the Fed's decision making. They'll have to decide whether the current pace of job growth is good enough.

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