In Unemployment Report, Signs of a Jobless Recovery
The unemployment rate surged to 9.7 percent in August, signaling that joblessness and financial anxiety were likely to endure in millions of American homes for many months.
The Labor Department’s latest employment report, released Friday, added weight to a growing belief that, at least technically, the economy had already escaped the grip of recession. Though 216,000 net jobs vanished in August, the losses continued to moderate from their worst numbers of the year.
Yet the report also lent credence to a deepening consensus that, even as the economy resumes expansion, the recovery was likely to be weak, prompting most companies to hold back from aggressive hiring.
“In the context of a full-blooded recovery, this report is disappointing,” said Alan Ruskin, an economist with the Royal Bank of Scotland in Stamford, Conn. “We’re still clawing our way back.”
Many experts envision a jobless recovery, in which the economy grows but job losses persist. That would reprise the end of the last recession in 2001, when payrolls continued to decline for nearly two years afterward.
Such an outcome would confront the Obama administration with a potentially nettlesome political problem heading into next year’s midterm elections. After the government unleashed $787 billion to stimulate economic growth, and after it bailed out financial institutions and the auto industry, the unemployment rate exceeds worst-case projections envisioned by the administration early this year.
On Friday, Jared Bernstein, the top economic adviser to Vice President Joseph R. Biden Jr., said the picture would look far worse were it not for the stimulus spending. He added that more help was on the way as the government distributed the remaining two-thirds of the package.
“Our interventions have contributed to significant cuts in the rate of job loss,” Mr. Bernstein said. “We’re headed in the right direction, but we’re far from out of the woods. There