Washington: With the sputtering US job market flashing an encouraging sign unemployment claims at their lowest point since January the White House announced a summit on Thursday to try to speed the day when hiring finally starts again.
While President Barack Obama called the new jobless figures hopeful, economists think claims will probably stay too high to indicate even a slight gain in jobs until early next year.
Job creation is essential for a sustained economic recovery. Obama said the White House is “open to any demonstrably good idea to supplement the steps we’ve already taken to put America back to work.”
The White House forum, to be held in December, will bring in public and private sector experts to talk about how to get job creation humming again, Obama said.
First-time claims for unemployment aid fell last week to a seasonally adjusted 502,000, fewer than Wall Street had expected.
Still, most economists say weekly claims would have to fall below 425,000 for several weeks to signal that the economy is actually adding jobs.
Claims for unemployment aid are generally considered a gauge of the pace of layoffs. They also indicate how much hiring is going on because laid-off workers who can’t find jobs are likely to request benefits.
“I’d be more comfortable if we were closer to 400,000” claims for jobless benefits, said Cary Leahey, senior economist at Decision Economics. “We still have a lot of work to do.”
Abiel Reinhart, an economist at JPMorgan Chase, offered a slightly more optimistic view, estimating unemployment claims in the high 400,000s would signal job gains are likely to follow within a month.
Many economists expect the nation to add jobs in the first quarter of next year, perhaps as soon as January. They project the unemployment rate to peak one to three months after that.
Other economists don’t expect the unemployment rate to peak until next summer.
Employers shed a net total of 190,000 jobs in October, according to a government survey of companies’ payrolls the 22nd straight month of losses. The US unemployment rate passed 10% for only the second time since World War II.
The last time the economy added jobs was in December 2007, when employers added 120,000 jobs. Initial jobless claims that month averaged about 340,000.
The weak job market is ratcheting up the political pressure on Obama administration. The summit was an acknowledgment that unemployment will remain a problem for months to come.
After his remarks, the president left for a trip to Asia, where US and global business prospects will be among the key issues under discussion.
Obama originally had promised the $787 billion stimulus package would create or save 3.5 million jobs. But the administration’s efforts to tally the jobs it attributes to the stimulus about 640,000 so far have been bedeviled by reports of double-counting and other errors.
An Associated Press-GfK poll released earlier this week found 46 percent of Americans approve of how Obama has handled the economy, down from 50% last month.
With the unemployment rate above 10%, congressional Republicans also have pointed to administration officials’ claims earlier this year that the stimulus package would prevent the rate from reaching double digits.
Economists think unemployment will stay above 9% through next year’s congressional elections. Exit polls showed The struggling economy was a key issue for most voters in last week’s gubernatorial elections in Virginia and New Jersey, both won by Republicans. Obama’s Democratic Party has a majority in both chambers of Congress.
Many of the administration’s liberal supporters are calling for more infrastructure spending or public works programs to directly create jobs.
Conservative economists, meanwhile, are pushing for permanent tax cuts. They argue that the uncertainty created by health care reform and other initiatives is discouraging hiring.
Private economists and Federal Reserve officials say the nation could face a “jobless recovery” as the unemployment rate rises despite modest economic growth. Companies may start hiring, but the economy needs roughly 100,000 additional jobs each month to absorb population growth and keep the jobless rate from rising.
The government also said Thursday that the number of people continuing to claim jobless benefits dropped by 139,000 to 5.6 million, also below analysts’ estimates. The figures on continuing claims lag behind the data on initial claims by a week.
Millions of unemployed Americans have used up the regular six months of benefits typically provided by states and are receiving extended benefits for up to almost another year and a half, paid for by the federal government.
Congress extended the program last week for the fourth time since the recession began. About 4 million people were receiving extended jobless benefits in the week that ended 24 October. That total was little changed from the previous week.