Unemployment Rate Falls in January
As the unemployment rate takes a marked dip for the second month in running as per January’s figures, there is cause for rejoicing across the U.S. However, the news could be better, according to economists, who fear that the dip may just be the precursor to a slow increase in the number of unemployed in the coming months.
The latest report from the Government shows that from the 9.8% unemployment rate in November 2010, the figure dropped to 9.4% in December and further dipped to 9% in January. The declining rate has encouraged optimism about employment prospects across the country. But there is another side to the story that is not quite as heartening.
Yet another survey has revealed that only about 35,000 new jobs were added last month. Given that the falling unemployment rate represents nearly 600,000 newly employed people, the two findings are not consistent. Economists are still trying to correlate these two contrasting pieces of information to understand what it all means for the job market.
While a cautious approach from independent analysts is not surprising, it is definitely food for thought that even White House officials are toeing a ‘wait and watch’ approach instead of advertising the declining unemployment rate. Unemployment rates often aggravate indicators of economics distress among individuals, such as reliance on payday lending to resolve money problems. In fact, economists at the White House have categorically stated that the figures need to be studied with care before any conclusions are made.
Even as he spoke of the encouraging dip in unemployment, the chairman, Council of Economic Advisers, Austan Goolsbee, warned that fluctuations are likely in the coming months. He said that data collected over such a short term should not be used as an accurate indicator of the true state of affairs in the segment.
Republicans vs. Democrats
The Republicans appear to be making the best of the White House economists’ disinclination to read much into January’s lower unemployment rate. John Boehner, Republican House Speaker (Ohio) pointed out that the continuing uncertainty in the job segment is clear indication that Obama’s attempts to hasten the economic turnaround have failed. In fact, the increased spending is causing more damage to the economy by creating uncertainties in the markets, the Speaker maintained.
On a non-political note, analysts also believe that the snowstorms and snow removal equipment that have swept across many areas in the country may have made a significant contribution to the low job addition figures. It remains to be seen if the continued fall in unemployment rates is sustained in the coming months as this will show if the weather has indeed played spoil sport with the President’s many plans for boosting the economic recovery.