Only 18,000 new jobs were created in June, far fewer than the 125,000 expected, and 44,000 fewer than previously reported for April and May (which were revised downward), and the unemployment rate rose 0.1% to 9.2% from 9.1 percent, rekindling fears of a double dip recession, according to Patti Domm’s CNBC article entitled “‘Horrific’ Jobs Report Renews Fears of Double-Dip Recession.”
The news annihilated the expectations of some economists who believed the June number would signal a positive turning point with monthly job growth increasing to the 200,000 level later in the year.
Laid off government workers continue to swell the ranks of the unemployed. “Even the hours worked slipped. It’s just a horrific report. Unemployment going up is not good,” Marc Chandler, Brown Brothers Harriman chief currency strategist, was quoted as saying.
“In addition to the shock value…we need to seriously question whether a double dip is there. I would say it’s back on the table,” David Ader, chief Treasury strategist at CRT Capital, was quoted as saying.
The shocking jobs report comes just days after the Federal Reserve ended its quantitative easing program, under which it purchased $600 billion in Treasury securities. The QE program has been criticized for inflating risk assets, such as the stock market, beyond an appropriate level.
Lawmakers may refocus their efforts on the labor market and away from cutting spending, which has implications for a possible U.S. default if the debt ceiling is not raised.
“These deficit cutting measures that they are going to come up with…It makes this even more at risk. The fact is they’re going to cut out tax loopholes and restore some taxes and cut spending…that’s less money in the economy. That’s a removal of stimulus,” Citigroup economist Steven Wieting was quoted as saying.