For those, like me, that have been bullish on the US economy, these less than stellar statistics should raise concerns about the strength of the US economic recovery. The unemployment numbers are skewed by several items. Job hunters that get discouraged and leave the workforce fall from the statistics, as such, the workforce numbers are falsely reduced.
In further evidence that the US economy hit a speed bump, the US economy added just 88,000 jobs in March, the lowest increase for nine months. This number was much weaker than the rise of approximately 200,000 predicted by many economists.
“For those that have been bullish on the US economy, these less than stellar statistics should raise concerns about the strength of the US economic recovery” said Steve Picarillo in a statement. “I have been concerned about economy for some time now” he continued. ”Given that most economists look at the addition of 90,000 jobs to the workforce as a benchmark that evidences growth of the workforce in excess of growth in the population.”
“The unemployment numbers are skewed by several items, including discouraged job hunters” Steve remarked. “Job hunters that get discouraged and leave the workforce fall from the statistics, as such, the workforce numbers are falsely reduced.” Indeed, due to this decline in the size of the workforce, the US jobless rate declined to 7.6% from 7.7% in February.
The retail sector, which lost 24,000 jobs in March, was the major factor behind the slow overall job creation. In a recent article, Mr. Picarillo expressed his concerns about the health of the retail sector. “Given the headlines on the sequester and the impact of increased payroll taxes, I have been concerned for a while about retail and other nongovernmental jobs ability to grow at a larger rate than the decline in governmental jobs.” Consumer confidence continues to be negatively impacted by “a plethora of reasons, which hits retail spend and thereby retail employment patterns”, Steve added. 12,000 jobs were lost in the US Postal Service, owed to the staff reductions as it aims to cut losses. Other sectors of the economy performed better with 51,000 new professional and business services jobs being created, and 23,000 new healthcare positions. The total number of unemployment people in the US in March was 11.7 million.
There are many potential reasons that could explain the sudden slowdown in job creation. “Certainly the federal spending cuts, which took effect on March 1, had a negative impact on confidence, reducing hiring” Mr. Picarillo continued. It is also likely that the weakening job creation could be partly attributed to the increased cost of hiring an employee due to healthcare requirements and increased taxation.
“No matter what caused this weakness, we cannot allow certain statistics, that show positive momentum in the economy to be read in isolation. One needs to look at the bigger picture. The US economy is showing more and more cracks. Given the ongoing cuts in governmental spending and the weakness in retail, it is likely that these the statistics will continue to evidence weakness” Steve concluded.
Steve Picarillo is an internationally known financial analyst and author. Steve has spent most of his career on “Wall Street” as a lead analyst covering global financial institutions. Mr. Picarillo recently launched several businesses, including consulting services to large financial institutions and a cost savings consulting services focusing on small and mid-sized companies. Steve is also a branding and franchise expert, an expert on the global economic environment, and a motivational speaker.
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