COMMENTARY| Over the winter the U.S. economy saw hiring pick up and unemployment decrease. However, as of last week, unemployment remained near a three-month high of 388,000, as reported by the Associated Press. New unemployment applications were expected to drop to 375,000. Instead, they are 13,000 applications higher than expected. That's not a good sign for the economy.
Over the winter, the economy seemed to be improving. For December, January and February, the economy added a combined 750,000 jobs. That's an average of 250,000 per month. Unfortunately, employers only added 120,000 jobs in March or about half what was added in February.
The unemployment rate is now 8.2 percent. The unexpectedly high number of new unemployment applications could be attributed to the "1,273 mass layoff actions," as reported by The Bureau of Labor Statistics. Those layoffs affected 117,817 people. A mass layoff is defined by a single employer laying off more than 50 people.
While the number of mass layoffs in March was lower than February, it is not a good sign for the economy. It means that employers are still reducing their workforces. As long as the unemployment rate remains high, above 5 percent, the economy will continue to stagnate. The U.S. economy is an economy that's based on jobs and productivity. Consumer spending drives much of the economy, and if people aren't working, they cannot spend money which reduces the need for goods and services and employees.
Furthermore, the federal, state and local governments collect taxes on people's wages and the products we buy. If people are earning less, the government is also earning less which means less money for police, firefighters, emergency services, schools, teachers, road improvements and city improvements. That translates to less available jobs in all of those professions.
It is an endless cycle of less money and less jobs, and it will continue into the future unless something breaks that cycle. In order to have a strong economy, the U.S. has to have a low unemployment rate and a strong workforce. So far, we have not seen either, and it's been almost two and a half years since the Great Recession ended.