Wait-and-see economy keeps jobless on edge
Temp hiring hints at recovery, but job growth isn't expected to match 1990s.
Here's the script for the economy: The nation's factories should be humming, business should be advertising for new workers, and backhoes should be digging the footings for new factories to spew out new products.
But with only five months left in the year, it's a matter of lights, camera, but very little action.
Most economists expect some stirring soon, given the amount of stimulus the economy is getting from the Federal Reserve and US government. They predict next month, or maybe the month after that, will be better.
In fact, some signs already point to improvement for the economy, but a key question remains whether faster growth will translate into many new jobs. From cheap labor overseas to factories at home that are able to do more with fewer workers, several factors could presage slower job creation than in the 1990s.
"The economy is not terrible right now, but the best that can be said is that it's partly cloudy," says David Wyss, chief economist at Standard & Poor's.
Proof of that came last Friday, when the government reported a the unemployment rate had fallen from 6.4 percent to 6.2 percent. The decrease was welcome, but came because fewer people were looking for jobs. Most analysts attributed this to teens failing to find work last month and heading for the beach. The statistics seemed to indicate a fair number of moms joined them. More important, the average work week diminished, and manufacturers continued to shed jobs.
"The labor market is as flat as a pancake and that is being optimistic," says Mr. Wyss.
In fact, the future may be a challenge as well. There is the possibility of a big strike at Verizon, which could push up the August unemployment rate. And the auto industry will be in heated negotiations with its unions. One of the major issues: how many parts will be made in China.
The stagnant jobs market will make it harder for President Bush as he travels this month fundraising and talking up his tax cuts. "So far he's said, 'Just wait and see, it will happen any moment,' " says Andrew Stettner, policy analyst at the National Employment Law Project in New York.
Economists believe some of this is starting to take place. For the second straight week, new unemployment claims were below 400,000. Above that level, the labor market is considered to be getting worse.