Pat Dollard

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Jobless Recovery. I wonder how many of those 2008 Hopey-Changey voters now have buyer’s remorse?

Business Week:

Hiring probably slowed in August as American companies became less optimistic about the strength of the recovery, economists said before a report today.

Payrolls climbed by 68,000 workers after a 117,000 increase in July, according to the median forecast of 86 economists surveyed by Bloomberg News before a Labor Department report. The unemployment rate probably held at 9.1 percent, marking 26 out of the last 28 months where it has been at or above 9 percent.

The first credit downgrade in U.S. history, political squabbling over debt reduction and fear of a default in Europe caused the Standard & Poor’s 500 Index to plummet 17 percent from July 22 to Aug. 8, probably prompting companies to cut back. The lack of hiring is one reason Federal Reserve Chairman Ben S. Bernanke last week said the central bank still has tools available to stimulate growth.

“We’ve seen employers ratchet down the pace of hiring,” John Herrmann, senior fixed-income strategist at State Street Global Markets LLC in Boston, said before the report. “We’re concerned about the possibility of unemployment drifting higher. We’ve had a choppy and uneven recovery.”

The Labor Department’s figures are due at 8:30 a.m. in Washington. Economists’ payroll forecasts ranged from a decrease of 20,000 to a gain of 160,000.

A labor dispute at Verizon Communications Inc., affecting about 45,000 workers, may have contributed to the slowdown in payroll gains, according to economists like Stephen Stanley at Pierpont Securities LLC in Stamford, Connecticut. Those striking workers were probably eliminated from the company’s headcount last month, leading to a comparable reduction in total employment, said Stanley, who forecasts a 55,000 gain.

Non-Government Jobs

Private payrolls, which exclude government jobs, rose by 95,000 after a gain of 154,000 in the prior month, economists forecast the report will also show.

Today’s data are likely to reflect the return of about 23,000 state government employees in Minnesota who were laid off during a three-week shutdown that ended July 21.

The economy expanded at a 1 percent pace in the second quarter following a 0.4 percent gain in the first three months of the year, the Commerce Department reported last month. Consumer spending grew 0.4 percent, the least since the last three months of 2009.

“Obviously, the economy is pretty weak,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. “Getting the unemployment rate lower is going to be difficult.”

Hiring Slowdown

The projected gain in total payrolls would bring the average from May through August to 71,000, down from 179,000 in the first four months of the year.

Sustained increases of around 150,000 a month are needed to bring unemployment down about half a percentage point over a year, according to Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “200,000 is the speed the economy needs to really cut into the jobless rate,” he said.

Through July, the economy had recovered about 1.94 million of the 8.75 million jobs lost as a result of the 18-month recession that ended in June 2009.

“Economic growth has, for the most part, been at rates insufficient to achieve sustained reductions in unemployment,” Bernanke said Aug. 26 at the Jackson Hole, Wyoming, central bank symposium. “It is clear that the recovery from the crisis has been much less robust than we had hoped.”