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U.S. unemployment rate hits 4-year low of 7.5%

By Associated Press


WASHINGTON >> The U.S. economy showed last month why it remains the envy of industrialized nations: In the face of tax increases and federal spending cuts, employers added a solid 165,000 jobs in April -- and far more in February and March than anyone thought.

The hiring in April drove down the unemployment rate to a four-year low of 7.5 percent and sent a reassuring sign that the U.S. job market is improving.

The economy is benefiting from a resurgent housing market, rising consumer confidence and the Federal Reserve's stimulus actions, which have helped lower borrowing costs and lift the stock market.

The stock market soared after the Labor Department issued the April jobs report Friday. The Dow Jones industrial average closed up 142 points, or nearly 1 percent, to a record 14,973. It briefly broke 15,000 for the first time.

Coming after a poor March jobs report and some recent data showing economic weakness, the April figures helped ease fears that U.S. hiring might be slumping for a fourth straight year.

"Businesses haven't lost confidence yet," said Sung Won Sohn, an economist at the Martin Smith School of Business at California State University. "Consumers are feeling better. The decent employment gains will add to the optimism and help lift future spending."

The Labor Department revised upward its estimate of job gains in February and March by a combined 114,000. It raised its estimate for February job gains to 332,000 from 268,000 and for March to 138,000 from 88,000.

Excluding May 2010, when the figures were skewed by temporary Census hiring, February's gain was the most since November 2005.

The economy has created an average of 208,000 jobs a month from November through April -- well above the monthly average of 138,000 for the previous six months.

The stronger job growth suggests that the federal budget cutting "does not mean recession," said John Silvia, chief economist at Wells Fargo. "It does not mean a dramatic slowdown."

The unemployment rate edged down from 7.6 percent in March and has fallen 0.4 percentage point since the start of the year, though it remains high. To help spur borrowing, the Fed has said it plans to keep its benchmark interest rate at a record low near zero at least until unemployment falls to 6.5 percent.

One cautionary note in the employment report: Most of the biggest job gains were in lower-paying fields, such as hotels and restaurants, which added 45,000 jobs, and retail stores, which added 29,000.

By contrast, construction companies and governments cut jobs. Manufacturing employment was flat.

Some higher-paying sectors added workers. For example, professional and technical services, which include jobs in accounting, engineering and architecture, added 23,000 jobs. Education and health services gained 44,000.

Average hourly pay rose. But because employees in the private sector worked fewer hours, average weekly paychecks declined.

But over the past year, total pay after adjusting for inflation is up a healthy 2.1 percent, economists said. That should help boost consumer spending in coming months.

The job growth is occurring while the U.S. economy is growing modestly but steadily. It grew at a 2.5 percent annual rate in the January-March quarter.

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gary360 wrote:
The only reason it's low is because unemployment benefits have run out for thousands of people. Numbers taken off the amount of people on unemployment. Playing with the figures again.
on May 4,2013 | 03:25AM
wiliki wrote:
Nope the pundits say there have been real new jobs created.
on May 4,2013 | 07:50AM
Kuniarr wrote:
This comment has been deleted.
on May 5,2013 | 11:51AM
what wrote:
No government has ever taxed and spent its way into prosperity -- the USA will not be any different.
on May 6,2013 | 02:49AM
OldDiver wrote:
You have things backwards. FDR's new deal which raised taxes and spent money got us out of the Republican Depression. Eisenhower spent a boatload of money building the interstate highway system which stimulated the economy and reduced the huge deficit from WW2.
on May 6,2013 | 09:43AM
what wrote:
You have things backwards. FDR's new deal raised taxes and prolonged the Democrat Depression until war broke out, which stimulated a post-war boom, allowing Eisenhower to spend a boatload of money building our wonderful interstate highway system, the foundation upon which our country became great. Now if only our State of Hawaii would spend money on highways instead of welfare and free government handouts...
on May 6,2013 | 11:37AM
soundofreason wrote:
Doesn't quite explain the dramatic increase in disability recipients.
on May 7,2013 | 06:24AM
palani wrote:
Good news for some, but not so much for job seekers and savers. As the Fed continues its suppressed interest policy, many are faced with the choice of either allowing their bank accounts to shrink from inflation or investing in riskier assets such as stocks. Although corporate America seems healthy right now, this surge has all the signs of a bubble.

From Ed Morrissey at hotair.com:

The civilian workforce participation rate remained at a 34-year low of 63.3%. However, the number of people not in the workforce declined slightly in the Household data from March by 31,000. It’s still 632,000 higher than in February. Discouraged workers rose by 32,000 and marginally-attached workers rose by 21,000, both of which are relatively narrow shifts.

The drop in the U-3 or nominal unemployment rate to 7.5% is one tenth of a point from March, but four-tenths from January. The U-6 total unemployed rate actually rose a tenth of a point in April to 13.9%, but that’s also a half-percent lower than January.

The 165K jobs growth figure beat expectations across the board — but let’s not turn that into better news than it is. At 165K, the US economy generated slightly more jobs than it needs to keep up with population growth (~150K). The civilian workforce participation rate makes it clear that we’re not putting people back to work — at best, we’re treading water. The revised February numbers are what we need as an average to make a dent in the massive number of people shut out of the jobs market. This is about the average we’ve seen for the recovery....

Still, details of the report remained consistent with a slowdown in economic activity. Construction employment fell for the first time since May, while manufacturing payrolls were flat. The average workweek pulled off a nine-month high, but average hourly earnings rose four cents[.]

Note that average hours worked are dropping, a possible response to Obamacare mandates for those working more than 30 hours per week.

For those alarmed at the growing income gap between the "wealthy" and "working" classes, look no further for an explanation. Artificially low interest rates overwhelmingly favor those fortunate enough to earn passive income from stocks. The disparity trend is directly attributable to the economic policies of the current administration.

on May 4,2013 | 05:48AM
wiliki wrote:
The Fed wants to increase inflation to about 4% in hopes that it will stabilize at the full employment value of 2%. That's the point of its' quantitative easing campaign.
on May 4,2013 | 03:22PM
wiliki wrote:
Didn't Obama promise to bring unemployment under 8%? Well check that one off the short list. Most of his promises have been fulfilled.
on May 4,2013 | 07:49AM
purigorota wrote:
I believe he said it will not go above 8%.
on May 4,2013 | 07:57AM
palani wrote:
Doh! You're right, purigorota.

That's the problem with using the U-3 number of 7.5% as a measure of economic health. The truth is much more complex. But, in fairness to wiliki, the President has been keeping his promises to lower our standard of living so that we are no longer the America of Exceptionalism, and to increase our energy costs to make "green" alternatives appear to be reasonable. From education to healthcare, it's not about the pursuit of excellence, but the regression to the lowest common denominator.

on May 4,2013 | 01:33PM
wiliki wrote:
How can you guys say that when he said it at the time unemployment was at 10%?
on May 4,2013 | 03:15PM
NanakuliBoss wrote:
Still whining.
on May 4,2013 | 09:37PM
soundofreason wrote:
2012 disability claims UP 10.58% from year before. http://www.ssa.gov/oact/STATS/dibStat.html
on May 7,2013 | 07:13AM
soundofreason wrote:
THAT'S what people are jumping to when their unemployment checks run out.
on May 7,2013 | 07:14AM
DowntownGreen wrote:
Bureau of Labor Statistics: Unemployment Rate: January 2009 when Pres. Obama was inaugurated: 7.8% (THAT"s when Mr. Bush "left office"), February 2009: 8.3%, March 2009: 8.7%, April 2009: 9%. Any economist will tell you that the unemployment rate was inan accelerated free fall from the Bush economy ... and it has been steadily declining. https://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment%20rate
on May 6,2013 | 04:06PM
64hoo wrote:
see how they lie about the unemployment and yet they laid half the traffic controllers and other government workers because of obamas sequester. and orders from the white house to the news media is to keep selling that story about people losing jobs because of the sequester which is shibai nobody lost there jobs if they did the unemployment would be real high. that's how phony are president is. making us believe that its the republicans fault and have the media back up obamas lies
on May 6,2013 | 05:28PM
DowntownGreen wrote:
Oh yeah. That makes sense.
on May 6,2013 | 05:52PM
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