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Happy Days Here Again? Jobs Surge, Stocks Hit Record High

Economy McClatchy Tribune News Service

Happy Days Here Again? Jobs Surge, Stocks Hit Record High

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By Kevin G. Hall, McClatchy Washington Bureau

WASHINGTON — Job growth surged in June, capping the best first half since 1999, driving blue chip stocks to a record high, and leading analysts to say the economy is shifting to higher gear.
Employers added a sizzling 288,000 jobs last month, the Labor Department said, pushing the unemployment rate down two-tenths of a percentage point to 6.1 percent, where it last was in September 2008.

Buoyed by the jobs report, blue chips raced past the 17,000 threshold at the open of trading and stayed there all day. Financial markets closed early for the Independence Day holiday, and the Dow Jones industrial index, composed of 30 major corporations, finished up 92.02 points to a record of 17,068.26.

The S&P 500 rose 10.82 points to 1985.44, itself approaching a record. The tech-heavy Nasdaq closed the day up 28.19 points to 4485.93.

The new jobs exceeded widespread expectations that the economy would add about 200,000 jobs last month. Statisticians also increased May’s already strong preliminary jobs number by 7,000 to 224,000, and April’s number by 22,000 to 304,000.

“Businesses are finally getting their groove back and hiring more. This signals that the expansion is moving into a stronger phase,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “The job market has kicked into a higher gear. This month’s strong job gain overstates the case, but job growth is now double the pace necessary to reduce unemployment.”

Over the past 12 months, the unemployment rate has fallen by 1.4 percentage points and there are 2.3 million fewer unemployed people. The rate peaked at 10 percent in March 2009.

“Unemployment will soon blow through 6 percent, which will prompt a pickup in wage growth,” predicted Zandi. “Most people have jobs, and care most about how fast their pay is increasing. As wages improve, so too will consumer confidence and spending.”

Getting the jobless rate below 6 percent would cross an important psychological threshold. Unemployment was 4.7 percent to 6 percent for much of 2007 and early 2008, when the economy was humming right before the crisis.

The sharply falling unemployment rate puts the Federal Reserve in a bind. It keeps the Fed on pace to end its controversial purchases of government and mortgage bonds by year’s end, removing a stimulus.

But because the economy is heating up, it might force the Fed to choose between higher inflation and higher lending rates. The Fed has held its benchmark lending rate near zero since December 2008. But as the economy improves, inflation should pick up, and raising interest rates is how the Fed clamps down.

AFP Photo / Scott Olson

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3 Comments

  1. charleo1 July 3, 2014

    Well, well, well. It looks like, “somebody,” who’s economic policies Mitt Romney claimed, “Was not only not, helping the economy recover from the recession, but was making it worse.” Evidently has been doing something very right all along. But, if we’re looking to hear it from the Right Wingers, and the, “Obama is the worst President, ever,” bunch. We shouldn’t hold our collective breaths. Because nothing, and I mean nothing, once claimed by the Right, is ever debunked. But just put away in a big trunk somewhere at Party Headquarters, to be recycled at the very next opportunity. That said, I believe this unexpectedly strong jobs report, along with a very positive outlook at the Dow. (the stock market once more into record territory,) is an achievement for which this President, and his economic team should be proud. And dispense of their usual subtlety, as in such statements as “This is welcome news, but we still have a ways to go.” And get out there, and really shout about these numbers. For they are the harvest the Republican obstructionists said would never come. The culmination of all those tough decisions made in the thick of a generational economic crisis. Ones like the economic stimulus, the decision to help GM, and Chrysler star alive. To extend unemployment benefits, and raise taxes on the top half of the upper one percent, All things the Republicans predicted would never work. And take a tip from Mel Brooks. His philosophy is, They don’t call it show business for nothing. So don’t be afraid to be that loudest person in the room. And if you’re going to approach the bell, then really ring the thing!

    Reply
    1. VoiceofReason613 July 4, 2014

      Very good analysis. Thanks.

      And all these economic improvements despite consistent Republican obstructionism.

      We should keep in mind that Republicans still support policies similar to those that left our country on the brink of a depression when Obama entered office! with an average of, 750,000 jobs bEing lost per month.

      Reply
      1. charleo1 July 4, 2014

        Exactly! Who believes the financial crisis that almost brought down the largest economy in the World, was caused by too much much regulation, and gov. oversight? And not a bought, and paid for abdication of Government’s role and responsibility to prevent it? Republicans do.

        Reply

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