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There are many ways of measuring the success of an economy, however for ordinary people – levels of employment are certainly one of the most important. When people are employed, the benefits accrue to the economy as a whole. People with jobs earn money to pay taxes, buy goods and services and invest in the economy. In addition, people with jobs don’t need supporting with benefits and support for food, housing and healthcare.
So the March report from the US Labor Department was very good news, with the report that 242,000 new jobs were created last month in the USA. This was quite significantly higher than had been predicted by many economists who expected unemployment to begin rising mainly due to the global economic stagnation that has been taking place. IN fact there were rises in all sorts of sectors from food services, construction and education. In fact there were only a few sectors that did struggle including the mining industry which has been suffering directly over the last few months.
The reported Unemployment rate has held steady at 4.9% which still represents an eight year low. Of course, although this figure sounds quite manageable as a percentage it does however mean that nearly 8 million Americans are without a job. There are also an estimated 6 million people in part time employment who are actually wanting to work full time. These figures are based on a fairly static ‘participation’ rate which is the number of people who are working or looking for work in the US economy.
Although these results sound fairly promising, there are other reports which have more cause for concern. For one the state of the trade deficit which has got steadily worse over the last twelve months. The current deficit (the amount the US imports compared with it’s exports) is now at the highest level in nearly five years. The main issue is the fall in US exports which is largely the result of the extremely strong dollar. There are some interesting reports on NBC and ABC regarding these economic issues on their web sites but you’ll need an American IP address to access them.
This is a significant worry though, falling exports will inevitably eventually filter down into the jobs market. The reason is that exports represent the production of US made products using US labor in American businesses. Although domestic demand is good, without exporting goods then overall demand for US goods and services will definitely start to fall and cause unemployment to start rising again. The business community are well aware of these risks and there is an increased pessimism which could cause further damage to the US economic recovery.