by Faiz Shakir, Amanda Terkel, Matt Corley, Benjamin Armbruster, Ali Frick, Ryan Powers, and Ian Millhiser
To receive The Progress Report in your email inbox everyday, click here.
Yesterday, during an appearance on ABC's This Week, Vice President Biden reacted to the latest national jobs report by conceding that the administration "misread how bad the economy was" back when the economic recovery act was being debated. "The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there," Biden said. "We misread how bad the economy was, but we are now only about 120 days into the recovery package." Indeed, June's unemployment numbers further prove the widespread weakness in the labor market due to the current recession, with the unemployment rate hitting an almost 26-year high of 9.5 percent. According to Labor Department statistics released last week, payrolls declined by 467,000 in June, following a 322,000 drop in May. However, Biden added that the administration expects the number of jobs created to pick up as stimulus spending quickens in the coming months.
JOBS LOSSES HIT MEN, MINORITIES HARDEST: Since the recession began in December 2007, the economy has lost a record 6.5 million jobs, and "men continue to bear the brunt of job losses" due to the drastic downturns in the manufacturing and construction industries. In the latest jobs report, 136,000 of the lost jobs were on factory payrolls and another 26,500 were in the auto manufacturing and parts industries. According to the latest data, women currently account for "a record high of 49.8 percent of all payroll jobs," while men account for 74.2 of the jobs lost since the recession began. "The gap between female and male unemployment has never been as large as it is now," noted Sophia Koropeckyj, an economist with Moody's Economy.com. And as Center for American Progress Senior Economist Heather Boushey pointed out, this disparity "has left millions of women nationwide to be the primary breadwinner -- a task made more challenging since women typically earn only 78 cents for every dollar men earn." Minorities have also been especially hard-hit by the recession, with African-American unemployment currently at 14.7 percent and Hispanic unemployment at 12.2 percent.
NOT ALL SIGNS ARE DARK: However, not all signs are pointing downward. June's rise in the unemployment rate was the smallest in a year. The Commerce Department reported last week that factory orders rose a better than expected 1.2 percent in May, and personal income and consumer spending also rose. The 1.4 percent increase in income was the first such increase since February -- "outpac[ing] the 0.3 percent gain expected by analysts" -- and was driven by increased unemployment benefits and payroll tax cuts that were included in the stimulus. Disposable personal income also rose 1.6 percent, after a 1.3 percent increase in April. "The picture that is emerging with increasing clarity is of an economy that has undergone a wrenching recession the last 18 months but is now gradually transitioning into recovery," said Bernard Baumohl of the Economic Outlook Group. The rise in income also caused the personal savings rate to shoot up to a 15-year high, a welcome development except for the fact that it translates into muted demand in a weak economy. Finally, the interbank borrowing rate dropped to its lowest level ever yesterday, indicating that various Treasury and Federal Reserve programs have at least temporarily succeeded in easing the credit crunch.
GIVING THE STIMULUS TIME TO WORK: As the Washington Post reported last week, "independent economists generally think that it is too early to judge the effectiveness of the stimulus plan, given that the spending package is only starting to ripple through the broader economy." President Obama has predicted that unemployment will reach 10 percent this year, while Nobel prize-winning economist Paul Krugman noted that "much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level." But while there has been some talk of a second stimulus package, the administration has thus far distanced itself from the idea. Both Biden and Austan Goolsbee of the Council of Economic Advisers called talk of a second stimulus premature, with Goolsbee adding that "there's still a major injection coming down the pike" from the first package. In fact, as Boushey pointed out, "the largest job gains from [stimulus] spending were projected to occur in the late fall through 2010," while the health care and education sectors have both now shown a net job gain since the recession began. In the last few days, stimulus projects have gotten underway in Colorado, New York, and Tennessee. As Obama explained last week, "it took years for us to get into this mess, and it will take us more than a few months to turn it around."