|More Mixed Messages|
|Subject||Labor market conditions|
|Topic||Employment, Unemployment, and Inflation|
|Key Words||Employment, Unemployment, Labor Force, Interest Rate|
January's monthly report on labor market conditions released by the U.S. Department of Labor, provided further support for those that view the recession to be ending and for those who believe it is not. Unemployment fell from 5.8 percent to 5.6 percent, the pace of layoffs slowed and the service sector added 56,000 new jobs for the first time since August 2001. Consumer confidence, however, fell as did average weekly hours and the economy continued to shed jobs. Reacting to the economic news, the Federal Reserve did not cut interest rates as it had done 11 times in 2001. Based on the latest labor market data, economists believe that even if a recovery is imminent it will be weak.
Although the economy continued to lose jobs overall, the unemployment
rate in January fell because 924,000 people dropped out of the labor market.
Dropouts include discouraged workers, people returning to school and others
returning to work in the household. Many economists believe that the number
of dropouts is overstated, perhaps because of seasonal adjustment factors.
Other signs of the economy's condition were mixed. A survey of consumer
confidence by the University of Michigan reported the index for January
to be slightly lower than for December. An index of average weekly hours
worked in manufacturing declined in January. Increases in average weekly
hours are thought to be a signal of future hires. Further evidence of
an economic improvement comes from temporary staffing agencies. These
agencies, which have cut 20 percent of their staff in the past 16 months,
lost only 3,000 jobs last month, the smallest decline since September
2000. Reviewing the latest economic data, some economists have concluded
that the recovery will be weak and that unemployment may reach 6 percent
for the year.
(Updated March 20, 2002)
|Source||David Leonhardt and Daniel Altman, "Economy Shows Healing Signs As Recession is Still Wheezing," The New York Times, February 2, 2002.|
Return to the Employment,
Unemployment, and Inflation Index
©1998-2003 South-Western. All Rights Reserved webmaster | DISCLAIMER