Call it a very bad case of the summer doldrums. Just as the United States is emerging from one of the worst recessions in decades, there are signs that the economy is once again losing steam.
That was all too clear with the release of the June unemployment report Friday, which said private sector job growth remains anemic.
President Obama has been there before, standing at a microphone having to explain away another disappointing jobs report. That's where he found himself again Friday, speaking to reporters at Andrews Air Force Base. The job market is slowly improving, but not, he acknowledged, at a fast enough rate.
“To every American who is looking for work, I promise you, we are going to keep doing everything that we can. I will do everything in my power to help our economy create jobs and opportunity for all people,” he said.
If there was any good news in Friday’s jobs report it was that unemployment rate fell from 9.7 to 9.5 percent. But that was largely because so many people have grown too discouraged to look for work and have technically fallen off the unemployment rolls. Bernard Baumohl of the Economic Policy Group says despite low interest rates and a huge government stimulus program, companies are still not hiring.
“This is not a very good sign for what economic activity will be like in the second half of the year,” Baumohl warns.
And it wasn't the only ominous sign this week. There was a steep drop in consumer confidence. Factory orders were down and so were new car sales. And then there's the housing market, which has shown a precipitous drop ever since the expiration of a government tax credit for homebuyers. Mortgage rates are now at historic lows.
“But on the other side of that, lending standards have tightened up substantially, so it can be a lot harder to qualify for mortgages,” says Stan Humphries, chief economist at the real estate website Zillow.com. He says banks simply aren't lending as easily as they were during the boom. But, he says, the data coming out right now point to another problem facing the real estate industry.
“It’s speaking to the underlying organic demand for homebuying right now, which is weaker than I think many analysts had thought,” he says.
Humphries says real estate prices have come down a lot, but there are still too many homes on the market. Demand for housing is weak, and that brings us back to the high unemployment rate. People can't buy houses if they don't have jobs, and Baumohl says even though corporate profits are very high and companies are sitting on wads of cash, a lot of them are still reluctant to hire.
“We had a major scare in this last recession, and we’re not sure whether we have eliminated all the uncertainties and whether we are going to see strong growth,” Baumohl explains.
Compared to a lot of economists, Baumohl is actually a bit on the optimistic side. He says once the European debt crisis subsides and Congress passes a financial overhaul bill, some of the anxiety about the future will ease and growth will pick up.
But over the past few weeks a lot of people have become more pessimistic, and that's been well reflected in the stock market. Until March, stock prices were climbing steadily, but the Dow Jones industrial average has lost ground for seven straight trading sessions -- and it's down a little more than 7 percent for the year.
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