The Bureau of Labor Statistics employment report found steady but disappointing growth in the labor market in July. Employers added 162,000 net jobs, and the unemployment rate fell slightly to 7.4 percent. While this would be considered decent growth in normal economic times, it falls short of expectations for a recovery from a deep recession. However, part-time workers are not being converted to full-time at the rate seen in previous recessions.
Moreover, as expected, the budget-cutting sequestration has had few adverse economic effects. Since sequestration took effect March 1 the labor market has continued to expand while federal employment has fallen by less than two percentage points.
July Employment Report
The July employment report showed modest but positive economic progress across the board. The household survey reported unemployment falling 0.2 percentage points to 7.4 percent, the lowest since December 2008 and down a full percentage point from December 2011. The household survey showed that the population grew by about the same amount as the number of people employed. The number of unemployed fell to 11.5 million, its lowest point since 2008.
However, the economy remains weak. At 58.7 percent, the July employment-to-population ratio remains little changed from the very worst of the recession. The improvement in unemployment since the end of the recession comes predominantly from workers leaving the labor force, and in July labor force participation dropped as 37,000 people left the labor force.
The modest job growth has only sufficed to keep pace with population growth. In 2009, the Obama Administration promised that the huge increase in government spending from the stimulus would lead to recovery and low unemployment within a few years. Instead, four years later, unemployment remains persistently high.
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