Jobless ranks soar past June forecasts
Almost half a million American workers lost their jobs in June, and high unemployment promises to hang around for the rest of the year even as an economic recovery begins.
The government said Thursday that 467,000 jobs were cut nationwide, much higher than the 323,000 economists had forecast.
The big bad number pushed the unemployment rate to 9.5 percent, up from 9.4 percent in May. Many economists predict the jobless rate will hit 10 percent this year before falling back. All told, 14.7 million people were unemployed in June.
It isn’t unusual for job growth to lag behind other aspects of the economy, but the situation still poses a dilemma: If people are out of work or fearful of losing their jobs, they aren’t likely to be confident. And people lacking confidence aren’t likely to open their wallets.
“For the economy to recover, the consumer has to start spending,” said Daniel Tessoni, an accounting professor at Rochester Institute of Technology.
Like many, Tessoni sees the recession losing steam, saying that even the unemployment rate won’t go much higher.
Merrill Lynch on Thursday upgraded its forecast for the economy for the final six months of 2009. The New York City-based financial firm now expects 2.7 percent growth in the gross domestic product from July through December, almost double its initial forecast of 1.4 percent growth.
The upward revision wasn’t surprising to Steve Forbes, editor-in-chief of Forbes magazine and a former presidential aspirant, who said businesses will increase production in the second half to replenish their depleted inventories. That should cause 2 percent economic growth, he said, with the improvement particularly noticeable in the fourth quarter.
“We’re going to have growth in the second half of the year,” Forbes said in a phone interview. “But the question is: How vigorous will it be?”
Forbes drew a comparison between the strong growth of the 1990s and the weak growth that followed the 2001 recession, and said that the weak-dollar policy of the past several years has hurt investment and run against the economic policies of former Presidents John F. Kennedy, Ronald Reagan and Bill Clinton.
Forbes also criticized state government in New York, saying the rising growth of government has driven up taxes and chased away businesses and residents.
The state’s unemployment rate was 8.2 percent in May, while the Rochester-area rate was 7.7 percent. June numbers for both are due out in two weeks.
JFSTINSO@DemocratandChronicle
