August 12, 2009

A recovery? Tell it to Main Street

The U.S. recession is making improvements on paper but not necessarily on Main Street or in purchasing power, economists said.

While the unemployment rate fell in June from 9.5 percent to 9.4 percent, the headlines can be deceiving. While 247,000 people lost jobs that month, the fewest in many months, 400,000 people gave up looking for work in June and were no longer figured in the unemployment rate, The Washington Post reported Wednesday.

In total, 5 million people have been unemployed for 27 weeks or more, while 9 million people are working part time due to economic reasons, the newspaper said.

As a recovery develops, firms have an awful lot of latitude to increase hours, before adding new workers said Forward Capital chief economist Richard Moody.

Many fear a jobless recovery in which firms do well, but hiring stalls.

We have excess capacity and high unemployment across the board. What we need is customers, Lawrence Mishel, president of the Economic Policy Institute said.

Wells Fargo economist Mark Vitner put it another way. It's going to be a recovery only a statistician can love, he said