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Economy continues to slow even as more austerity looms

By Masao Suzuki

San José, CA – On Friday, September 1, the Department of Labor’s report on the job market in August showed continued signs of cooling. Only 187,000 net new jobs were created, and the Labor Department adjusted down the new jobs for June and July by 130,000. This meant that the three month average was only 150,000 new jobs. In contrast, in the first three months of the year, employment grew on average by 312,000 jobs, so that the rate of job creation has been cut in half.

The official unemployment rate also rose in August to 3.8%, from 3.5% in July. The August rate was the highest since February of 2022, when the jobs market was still recovering from the 2020 recession. Almost all groups saw a rise in their unemployment rate, with teenagers and Asian Americans seeing the biggest increases of almost one percent. The biggest exception was for African Americans, whose unemployment rate actually fell by one-half of one percent from July to August.

Government austerity, or cuts in spending, are showing up in the job markets, as all levels of government combined (federal, state and local) have only added 5000 job the last two months. More and more state and local governments, including school districts and state colleges and universities, are facing budget deficits, which means spending cuts and/or raising taxes or fees. Student loan interest starts to accrue this month, and payments are beginning in October. Last but not least, the federal government is facing a likely partial shutdown in October, as right-wing Republicans in the House of Representatives are refusing to pass any bill to continue funding.

Signs of distress are also growing among working-class households. Rates of late payments are rising for credit cards and car loans, even as student loans, the biggest chunk of consumer debts, are still in payment suspension. Many retailers are reporting sagging sales.

#SanJoséCA #austerity