As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions and the jobless rate rose for the first time in nearly a year.
Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.
The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.
Long-term unemployment also took a sharp upturn, with the number of those out of work for 27 weeks or more jumping from 5.1 million to 5.4 million. The average duration of unemployment moved from 39.1 weeks to 39.7 weeks.
What’s to blame?
Well, for one thing the government stimulus is no more. It’s pretty clear at this point that we needed more money to prime the pump, especially given the wildly inaccurate numbers from Q4 2008. First it was a decline of 3.8%. That’s why the stimulus was set sub-trillion dollars. What was the real number? 3 years later it was discovered that the GDP had fallen 8.9% in that quarter. So we were working with faulty numbers. Still, that ship has sailed.
Second, the business sector simply isn’t willing to invest enough to fill the gap, even with record profits, so the economy is stalling out.
Here’s a quick graph of corporate profits (h/t: Carpe Diem)
Long story short…let’s hope that corporations start spending because if they don’t…we’re screwed.