Economy treading water as jobless rate edges up
Friday, September 3, 2010; 10:22 PM
It's not a recession, and it's not much of a recovery. Instead, the U.S. economy is treading water.
In a mixed portrait of the labor market, government data released Friday showed that the unemployment rate rose to 9.6 percent, the Labor Department said Friday, from 9.5 percent in July. Private employers added 67,000 jobs, better than analysts expected but well below the level of job growth needed to keep up with labor force growth.
The new jobs report, coupled with other recent data, offers a portrait of an economy that is neither growing fast enough to bring down joblessness nor sinking back into a new downturn.
"It's not the recovery that we would think we're entitled to given how deep the recession was, but it's also not indicative that the economy is gasping and falling back into recession," said Alan Levenson, chief economist at T. Rowe Price.
The report was strong enough to drive the stock market up 1.3 percent for the day, as measured by the Standard & Poor's 500-stock index. But it was also weak enough to keep pressure on President Obama and Congress to try to find new ways to spur job creation.
Obama called the eighth straight month of private-sector job growth "positive news" but added that "it's not good enough."
"It took years to create our current economic problems, and it will take more time than anyone would like to solve our problems," the president said Friday in the Rose Garden.
The president will offer some proposals to try to strengthen the economy Wednesday, according to a post on the official White House blog, including extending tax cuts for middle- and low-income people and targeted steps to support growth.
According to sources familiar with White House deliberations, officials are also weighing business tax breaks meant to spur hiring, such as a temporary payroll tax holiday and a permanent extension of a tax credit for research and development. The sources spoke on the condition of anonymity because the plans have not been released.
A slew of economic indicators in recent weeks have pointed to a slowing recovery. Gross domestic product grew at a tepid 1.6 percent annual rate in the April through June period, well below the nations' long-term growth rate, and forecasters aren't expecting readings from late summer to come out much stronger than that.
And the number of Americans filing new unemployment benefit claims has hovered near recessionary levels in recent weeks, despite an economic expansion that has now been underway for a full year.
The new jobs report was good news against that gloomy backdrop, though not against any normal economic measuring stick.