The U.S. economy added 163,000 new positions to the workforce in July, but that situation likely won’t help many of the nation’s jobless, according to a Washington economist.
Despite the robust job growth reported Friday by the federal government, the unemployment rate ticked up to 8.3 percent. Economists reportedly were expecting the job-creation figure to be closer to 100,000.
“Private employers have now added jobs for 29 straight months. But the overall pace of job creation remains modest, and jobs remain very difficult to find for large numbers of the unemployed — a situation that likely will persist for some time,” says Chad Stone, chief economist of the Center for Budget and Policy Priorities, an independent Washington think tank.
Although July created a rosy picture, the overall economy shows no signs of generating a robust recovery, Stone says.
“To the contrary, the Federal Reserve’s monetary-policy-making committee has again stated that it ‘expects economic growth to remain moderate over coming quarters and then to pick up very gradually’ and ‘anticipates that the unemployment rate will decline only slowly,'” he says. “Under those circumstances, the risk of inflation is low, enabling the Fed to pursue more aggressively the ‘maximum employment’ goal of its dual mandate. On the fiscal side, temporary, well-targeted measures that inject new spending into the economy will boost economic growth and job creation without undermining efforts to stabilize the long-term budget deficit or creating financial market instability.”
Given the current picture, Stone once again repeated his oft-stated recommendation to policymakers to extend emergency federal unemployment insurance (UI) past its scheduled expiration at the end of the year.
“Unemployment insurance is one of the most cost-effective policies available for boosting economic growth and employment in a weak economy, and emergency federal UI has been an important source of support both for unemployed workers and their families and for the economy since mid-2008,” Stone says. “The program, however, was scaled back in its latest reauthorization in February and is scheduled to expire altogether at the end of this year. Already, every state has ‘triggered off’ the Extended Benefits (EB) program and the program will pay its last benefits in the last state (Idaho) next week. Starting in September, the number of weeks of Emergency Unemployment Compensation will fall.
“The unemployment rate is expected to remain around 8 percent at the end of this year. Since policymakers first created a federal emergency UI program in 1958, they have never allowed it to end when unemployment topped 7.2 percent. Thus, it would be unprecedented if policymakers were to allow that to occur at year-end,” Stone adds.