Last month, payrolls in the United States fell by 125,000 as the U.S. government shed 225,000 temporary 2010 census workers, according to a report by the Bureau of Labor Statistics. The loss was tempered by a gain of only 83,000 private-sector jobs added last month, far fewer than many economists had expected.
The report also showed that average hourly pay and average workweek both declined in June.
“This jobs report is a disappointment for every family and every small business,” said Rep. John Boehner (R-Ohio) in a statement last week.
The continued loss of U.S. jobs is alarming as consumer spending makes up approximately 70 percent of the U.S. economy. Fewer jobs grant consumer less income, and less income translates to fewer goods and services purchased, and slower economic growth.
One example is consumer electronic store chain Best Buy Inc., which is seen as a bellwether for consumer spending patterns. Last month, the company announced that 2010 first-quarter sales came in below expectations.
“Consumer spending has been episodic and it appears that our customers are operating on cues from the broader environment,” said Brian Dunn, Best Buy’s CEO, in a conference call with analysts on June 15. “But while spending has clearly rallied from low levels of 2009, our data paints a picture of the consumer coming out to spend and spend well during important events, but taking pauses in between.”
Speaking at Andrews Air Force Base last Friday, President Barack Obama said that the country’s employment situation was headed in the right direction, but not improving fast enough.
The president announced 5,000 new but temporary construction jobs, according to an AP report.
American Bankruptcies Up
U.S. consumer bankruptcy filings during the first half of 2010 increased by 14 percent, according to a report by the American Bankruptcy Institute (ABI) released last Friday.
Bankruptcy filings for the first six months were 770,117, up from 675,351 during the same period in 2009.
ABI said that the increase was due to an almost perfect storm of economic events, low home values, and high unemployment.
“Years of rising consumer debt and low savings rates, combined with the housing and unemployment crises, are causing bankruptcy levels not seen since the 2005 amendments to the Bankruptcy Code,” said ABI Executive Director Samuel Gerdano in a statement.
According to ABI, the pace is expected to quicken during the rest of the year.
“We expect that there will be more than 1.6 million new bankruptcy filings by year end,” Gerdano said.
Global Economic Growth Slowing
Finally, last week, Chinese Premier Wen Jiabao admitted that China’s economic growth is slowing and that he was concerned with its short-term growth, in a statement posted on its central government site.
The statement follows two surveys of Chinese manufacturing activity—the PMI (Purchasing Managers Index) and another by HSBC Bank—released last week suggesting that the country’s output is slowing.
China, with its economy dependent on exports, is being weakened by austerity measures in Europe as well as declining demand in the United States, China’s largest export market. Fewer purchases made by U.S. consumers could hurt Chinese factories and companies.
The economic situation in Europe is still precarious. Last week, U.K. ministers were told to slash budgets by between 20 to 40 percent across departments in the latest measure to bring in balance a more than 110 billion pound budget gap.
Further, stress tests on European banks will be released on July 23, according to French Economy Minister Christine Lagarde. Regulators have been closely monitoring European banks since the Greek debt crisis called into question the viability of the euro currency and economic growth in the eurozone.
U.S. Market Reaction
Based on weakened growth domestically and in Europe, the Federal Reserve signaled last month that it would likely put off increasing interest rates until well into 2011.
Last week, the Dow Jones Industrial Average shed 457 points, down about 4.5 percent as pessimistic economic readings took the wind out of bullish investors’ sails. Similarly, the S&P 500 Index was also down about 5 percent for the week.
For the quarter that just ended last week, the Dow was down about 10 percent in the worst quarter since the last quarter in 2008 when the financial crisis took hold of global stock markets.
As a whole, all industrial sectors declined during the second quarter.
