Ben Bernanke (Photo: Wikipedia Commons)
First-time claims for unemployment benefits rose to 429,000 for the week ending June 18, the Department of Labor
reported this morning. It was the 11th straight week of claims above 400,000, and another sign that the weak labor market reflected in last month's official jobs report has continued into June. The four-week running average, considered a more reliable measure because it smoothes out volatility, came in at 426,250 after first-time claims for the previous week were revised upward. The biggest rise in new claims was in Pennsylvania where there were layoffs in the transportation and the service industries.
Any way you slice it, this isn't good news. And it was followed by a Census Bureau report that new-home sales fell 2.1 percent to an adjusted annual rate of 319,000 in May, a month that is normally popular among home-buyers. Weak demand for new homes means weak demand for construction workers. Since the beginning of the recession, some 2 million construction jobs have been lost. Residential construction is usually a main driver of growth after a recession. But this financial, credit-driven recession isn't usual.
The reports follow on the heels of Wednesday's press release from the Federal Reserve's Federal Open Market Committee, which, once again, revised downward its previously over-optimistic predictions for growth in gross domestic product.
In February, the Fed predicted GDP growth for 2011 would run 3.4-3.9 percent; in April, it revised this to 3.1-3.3 percent; the latest revision puts it at 2.7-2.9 percent.
In April, the FOMC said the official unemployment rate would hit somewhere between 8.4-8.7 percent by the end of 2011. That prediction has now been revised to 8.6-8.9 percent. The official, or "headline," unemployment rate, now at 9.1 percent, low-balls what is really happening in the labor market. Alternative measures gauge the situation better. But whichever figure one chooses the trend is not good.
And yet, "jobs" and "unemployment" made only brief appearances in Wednesday's question and answer session with Fed Chairman Ben Bernanke. Just a "temporary" soft patch, we're told. Things will pick up in the latter part of the year, they say.
How many times have we heard this song-and-dance routine since Bernanke (and so many others) failed to predict a recession that we were already in? The disconnect between the reality of rank-and-file Americans and the "reality" of our prognosticators continues apace. Although we're told repeatedly by the happy-talkers that the worst is behind us, for many out-of-work Americans who have lost their homes, run through their savings, been unable to pay for their kids' college and still can't get a job interview, the worst is right now.