The economy added a paltry 18,000 new jobs in June, far below what economists had expected. Analysts had been predicting an increase of at least 100,000 until minutes before the statistics were released by the Bureau of Labor Statistics.
The unemployment rate edged up slightly to 9.2 percent, as most sectors of the economy failed to add jobs and the government continued to shed workers.
The dismal jobs numbers renewed fears that the recovery was losing steam and that the economy could be headed into a double-dip recession. Only 64.1 percent of Americans 16 and over are employed, the lowest rate since the 1980s. Economists are predicting a 2 percent growth rate for the second quarter, and growth of 2.6 percent for the full year, even weaker than in 2010. That’s probably not enough to convince employers to hire at a faster pace, according to analysts.
Some experts say the high level of economic uncertainty is big a deterrent to hiring. The debate over raising the debt ceiling and fears about a potential U.S. default are unnerving to businesses. “The problem for the job market isn’t layoffs and cost-cutting, it is the lack of hiring,” says Mark Zandi, chief economist at Moody’s Analytics. “Large and mid-sized companies appear to be nervous about the policy environment, most important being whether and how policymakers will address the nation’s fiscal problems.”
Meanwhile, the quality of jobs that are being created leaves a lot to be desired, in terms of pay, benefits, hours and skills. The recession wiped out millions of high-paying jobs in construction and finance, and the recovery is generating mostly lower-paying service jobs, particularly in the retailing and hospitality sectors.
Americans who have managed to hang onto their jobs still have plenty of anxiety. Two years into the recovery, some companies are continuing to downsize and cut costs. Goldman Sachs began a round of layoffs last week, and is expected to cut up to 230 jobs in New York. Lockheed Martin recently announced job cuts totaling 1,500 positions, while Gannett laid off 700 people in recent weeks.
“There is still a risk of layoffs to many employees, and unemployment remains above what it’s been historically,” says John Morgan, senior vice president at Lee Hecht Harrison in New York, a career consulting firm, who also points out that those with highly specialized skills, such as software engineers, are much less at risk. “Most of the technology companies are hiring, and if you’re in health care, you’re probably in good stead. But if you’re someone who’s in back-office operations, ask yourself, what skills are you really bringing to the table that separates you from everybody else?”
Jennifer DePaul of The Fiscal Times contributed reporting.
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