U.S. Job Market Is Improving, Economists Say

job market improvingBy Paul Wiseman

WASHINGTON -- Hiring through the rest of 2012 will lag the brisk pace set early this year. But it will be strong enough to push the unemployment rate below 8 percent by Election Day.

That's the view that emerges from an Associated Press survey of 32 leading economists who foresee a gradually brighter jobs picture. Despite higher gas prices, Europe's debt crisis and a weak housing market, they think the economy has entered a "virtuous cycle" in which hiring boosts consumer spending, which fuels more hiring and spending.
The survey results come before a report Friday on hiring during April. The April report is eagerly awaited because employers added surprisingly few jobs in March. That result contributed to fears that the economy might struggle to sustain its recovery.

But the economists think the recovery will manage to reduce unemployment to 7.9 percent by Election Day from 8.2 percent in March.

Falling unemployment would boost President Barack Obama's prospects in November. Going back to 1956, no president has lost a re-election when the unemployment rate dropped in the two years before the election. And none has won when the rate rose over that time.

Unemployment was 9.8 in November 2010. If the surveyed economists prove correct, the rate will be nearly 2 percentage points lower when Americans vote on Nov. 6.

Yet the AP economists think it will be at least three more years before unemployment falls below 6 percent, which would be a sign of a healthy economy.

They predict that the economy will grow 2.5 percent this year, up from 1.7 percent in 2011. In a healthy economy, 2.5 percent annual growth is usually adequate. Not so when 12.7 million people are unemployed. The economy would have to grow about 4 percent this year to lower unemployment another percentage point.

The economists expect job growth to average 177,000 a month from April through June and 189,000 in the second half of the year. That would be down from an average 212,000 jobs added monthly from January through March. Last year, job growth averaged 158,000 a month.

"The job market is improving enough that consumer spending can grow at a moderate pace as opposed to an anemic pace," says Phillip Swagel, a University of Maryland economist. "Businesses are finally confident enough to hire and invest."

The AP survey collected the views late last month of private, corporate and academic economists on a range of indicators.

They expect Europe to avoid a severe downturn this year even though it's struggling with a debt crisis and is likely in a recession. And most don't think any European nation will default on its debt this year.

But they worry that the lingering effects of the housing bust are slowing the U.S. economy's expansion. The AP economists say growth can't accelerate until national home prices -- which dropped for a sixth straight month in February -- finally bottom.

Falling house prices can slow numerous sectors of the economy. They demoralize consumers by eroding their chief source of wealth. A 30 percent drop in housing prices has vaporized $7 trillion in home equity since 2006.

Some of the economists fear that the financial crisis and recession left lasting consequences. Among their concerns:

Growth will remain slow as consumers pare debts. The long-term unemployed will struggle to regain jobs. People will no longer see housing as a source of wealth. And many will lose faith in the idea that Americans can achieve rising living standards.

One sign of the still-tough job market is long-term unemployment: Forty-three percent of the unemployed -- 5.3 million Americans -- have been out of work six months or more. Most of the economists blame weak customer demand. Only about a third think the main reason is a mismatch between the skills workers have and the skills employers need.

The unemployed might not get much relief from manufacturers, despite a report this week that U.S. factory activity grew last month at the fastest pace in nearly a year. The economists think manufacturers, a key source of hiring during the recovery, will fill jobs more slowly the rest of the year. If so, that could slow overall job growth.

Another factor in the economists' cautious view of hiring: political bickering and doubts about government policies in an election year.

"There's still a ton of uncertainty about the future of tax and regulatory policy," says Swagel, a Treasury Department official under President George W. Bush. "Business that might be tempted to expand say, `I don't know what my taxes will be in three years.' "

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Leonard Thomas

Less than 8% of Americans filed for unemployment compensation in the last 30 days. Unemployment compensation is s state administered program, in most states funded with federal money. Congress cut off federal funding to states for unemployment compensationover two years ago. Most unemployed Americans know this and do NOT apply for unemployment compensaation. Despite that, States report the unemployment rate as the percentage of the total population that filed for unemployment compensation in the last 30 days. *% of America filed for unemploymetn in the last 30 days but over 50% of Americans are currently unemeployed. None of the politicians is telling the truth about the number of unemployed Americans, and they all know it.

May 03 2012 at 8:01 PM Report abuse +1 rate up rate down Reply

All news agaencies can tell the people the ecoonomy is getting better. You think those that have lost jobs homes and have become homeless, believe it? Ask the seniors that live on fixed income, you think like having to decide whether to buy food or meds? The government and so called economists are trying say something that isn't true........people know the truth.......they can not be swayed by the media or government or experts.

May 03 2012 at 7:48 PM Report abuse +1 rate up rate down Reply

i thi nk that te rebulicains will get riof the problem damn mexicans and some blacks thats the problem with us we need to get them wetback back to mexico and leave them other wise we ant going ton get america back as arericia
aremica was fine till the wetbacks came here now americas have al kinds of trouble
so if you mexcian and black person you stand a better chance of being hired but if you ant those two you wont be hired and thats how it is now.but i hope if romey getsin hell change the damn wothless democrates i was one now im and idepenent. i got tired of the bulshit now im going republican romey

May 03 2012 at 6:31 PM Report abuse rate up rate down Reply


May 03 2012 at 5:02 PM Report abuse rate up rate down Reply
1 reply to Pumpkinpie's comment

Did you not read the CNNMoney report of the 86 million unemployed that are "invisible" to this other piece of "good news"? Did you not read and understand that Unemployment claims are down...not because of high employment, but because there are so many that have used up their unemployment funds. Don't tell the Republicants...and for gods sake don't tell the excuse of a President we have. He thinks every thing is peachy.

May 03 2012 at 7:26 PM Report abuse -1 rate up rate down Reply

Can't do much spending when all our money is going to high gas price. It seems Obama is in bed with these big oil buddies like Bush was.

May 03 2012 at 4:51 PM Report abuse -2 rate up rate down Reply

Most of the economists blame weak customer demand. Only about a third think the main reason is a mismatch between the skills workers have and the skills employers need. 2/3 of economists are blaming consumer demand as our economic problems. Hello! Since 90 % of consumer products for sale in the US are made by low wage offshore countries (China, Taiwan, Indonesia etc.), no amount of consumer demand will revive the US Economy. More consumer demand just stimulates offshore producers it does nothing significant for domestic producers.
Hello! 1/3 of economists think its skill level. It is amazing that China etc. can pay as little as 58 cents/hr. and get better skilled workers than are available in the US. Its cheap labor combined with no environmental, worker safety, overtime and child labor laws that are hurting the US Economy. Until Congress requires products SOLD in the US be made with the same laws required of MADE in the US, manufacturing will continue to decline and unemployment will continue to increase regardless what economists say.

May 03 2012 at 4:33 PM Report abuse +1 rate up rate down Reply

I was watching the Today Show the other morning and they ran a story about large groups of people going to different small businesses to shop. Due to this happening all over the country these small businesses were starting to hire people. Instead of always complaining about the economy why don't all Americans support small businesses? We could really make a difference if we stopped shopping at places like Walmart and instead went to small businesses and bought our goods. It is up to us to make the economy better. Sitting around complaining accomplishes nothing. Tax breaks for the rich accomplish nothing. The middle class are the ones that will heal our economy.

May 03 2012 at 4:31 PM Report abuse +2 rate up rate down Reply

Only on aol would you find this garbage!

May 03 2012 at 4:07 PM Report abuse +1 rate up rate down Reply
1 reply to Dave's comment

Then don't read it, and more than that don't comment on it

May 03 2012 at 5:03 PM Report abuse +1 rate up rate down Reply

And the liberal press is dutifully doing it's usual BS job to lull the voters that everything is Jim dandy and not to worry as by election time Obama will have saved the day. Those unemployment numbers are bogus and they know it but they also know the public will believe any thing the liberal press tells them. Goebbels, Hitler's propaganda chief would be proud of them and a bit green with envy.

May 03 2012 at 3:16 PM Report abuse -2 rate up rate down Reply
2 replies to Escalonz's comment

Same bogus numbers that have been used for decades, get used to it.

May 03 2012 at 5:05 PM Report abuse rate up rate down Reply

Just like the right will believe everything FIXED news tells them. If this were a negative story about the economy you would be jumping up down and bashing the President wouldn't you? What a great American you and the rest of GOTP is. Happy to hear negative news about the AMERICAN economy because you HATE the AMERICAN President. Then in Nov. you're gonna sit back and wonder what happened. But make sure you take your frustrations out on Fixed news for making you believe Mitt (who your party doesn't like) could win.

May 03 2012 at 6:33 PM Report abuse +1 rate up rate down Reply

Now, is this actually happening, or are the economist being paid by the Obama administration to fudge the numbers a little? I guess we'll see after the election if unemployment suddenly drops again.

May 03 2012 at 3:16 PM Report abuse -2 rate up rate down Reply

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