To follow up on Christian’s post, the job report was released early this morning and there has been an abrupt slowdown in hiring in March. There was just 126,000 jobs were added in March, compared to the larger number add over the previous year. This slow down in hiring shows that the economy has slowed significantly over the winter. Some analysts want to blame some of this on the horrible weather the northeast experienced earlier this year coupled with the downturn in oil prices.
Carl Tannenbaum, an economist at Northern Trust, thinks that the American energy industry is trying to adjust to the lower oil prices, which has an impact of the rigs that are active, mining, other energy related industries. The lower oil prices are causing the energy sector to lose jobs, like Mary Benjamin’s project, but the consumers are able to save money. This slow down might have the Fed reconsidering raising the interest rate, the rate may stay near zero for a bit longer since this is showing the economy is not as strong as we once thought it was.
This reaffirms what Federal Reserve chairwoman Janet Yellen has been saying over the past few weeks. She has been more cautious in her assessment of how the economy is doing. She wanted to see “continued improvement in the economic conditions” especially in the labor market. Unemployment has held at the 5.5% and wages rose about 0.3%.
This past year the job market gained more than 200,000 jobs every month, and this month’s steep decline shows that we are losing some momentum. We saw trade decline due to the rise in the strong dollar. Retail sales were down, which is a shock since households have a larger disposable income due to the fall in oil prices, but others point that it could be due to the harsh winter months. However, there are positive economic reports that are coming out. The Labor Department says there will be a 15 year low of new claims filled. Consumer confidence also has started to recover.. House prices have continued their recovery as well, due to low mortgage rates, easy access to credit, and job and income gains. Which does prove the economy is starting to look up. If we look at the post on McDonald’s raising wages showing the strength of the labor market and needed to keep up with other low-wage workers.
However, the falling rate conceals persistent difficulties facing specific sets of laborers. The unemployment rate for blacks is usually twice as high as the rate for whites, but since the recession this rate has increased. The article states that white unemployment dropped to 4.5 percent in the last quarter but for blacks remained at 11 percent. Likewise the median hourly wage for black workers have dropped by 3.6 percent since the start of recession, which is more than double for whites. Unemployment for the older generation is still an issue as 45 percent of job seekers over 55 were out of work for 27 weeks or more. So clearly there is much more to look at than just the amount of jobs created and unemployment rate. Is there any way for us to tackle this issue of unemployment for different groups? Do we think the economy is back on track or are there more issues that we need to look at?