The Department of Labor released their monthly job reports and they were anything but hopeful. 78,000 jobs were added, less than half of the expected 185,000 and far short of April growth of 274,000 jobs. The unemployment rate remained relatively unchanged at 5.1%.
The telltale signs are in the reports though. The biggest area of growth was educational and healthcare services industry with about 40,000 jobs. The issue many feel is a problem remains the lack of manufacturing production and this report does help much. The manufacturing sector lost 7000 jobs. Another problem too is that long-term unemployment remained unchanged. Long-term unemployment is defined as people unemployed longer than 27 weeks.
Also not helping matters much is wages versus inflation. Wages increased 0.2% and inflation climbed 0.5%. Inflation climbed higher than salaries.
The one area of note is the construction industry. The housing market is booming right now. Construction jobs climbed by 2,000. Interest rates still remain low and people are buying goods and services but for how long? With inflation climbing and oil prices skyrocketing with no end in sigh where do things go from here?
This puts worry in many analysts about growth in the U.S. economy and they say they Fed will probably rethink its direction on interest rates. In a recent CNBC interview, Dallas FED president Richard Fisher suggested the FED might not kick up interest rates any further but for the moment.
The economic future may provide reason for worry though. Many analysts fear petroleum prices will continue to rise and go well above $60 a barrel. The demand in the United States continues though as millions hit the road for the recent Memorial Day weekend, marking the beginning of the summer driving season.
The current “textile rebellion” from China continues to strip away new jobs. Commerce Secretary Gutierrez is currently in China to help resolve disputes because of the inequity in the market place. It seems China has learned from the Wal-Mart school of business, undercut all your competitors until they don’t exist anymore.
In a recent email by Professor Peter Morici at the University of Maryland’s Robert H. Smith School of Business, his predictions weren’t exactly pleasant.
“Overall, Americans continue to enjoy a false prosperity. Paper gains on homes and borrowing from foreign governments are powering rising living standards, even as the inflation-adjusted wages of ordinary Americans fall.
Debt mounts ever larger. Sooner or later, the foreign line of credit will run out, and the piper will have to paid.”
John Stith is a staff writer for Murdok covering technology and business.
