According to the U.S. Department of Labor on Friday, the U.S. economy added 54,000 jobs during May, which was a weak showing indeed, and too close for comfort to the crummy numbers published by ADP earlier in the week. The question now is whether the May numbers are a big bump in the road to recovery–and that road certainly is bumpy–or the start of a more sinister trend.
Employment gains had been averaging 220,000 per month during the previous three months. The unemployment rate ticked up to 9.1 percent.
On Thursday, in a report overshadowed by the glum ADP numbers a day earlier, Labor had reported that for the week ending May 28, initial jobless claims was 422,000, a decrease of 6,000 from the previous week’s revised figure of 428,000. That’s a small decrease, but the week-by-week numbers are frothy. The four-week moving average was 425,500, a decrease of 14,000 from the previous week’s revised average of 439,500.
Consumer Bankruptcies Drop
Employment might not even be close to full speed ahead, but at least fewer U.S. households are now running off the road–that is, resorting to bankruptcy to get out from under mountains of debt. According to the American Bankruptcy Institute and the National Bankruptcy Research Center on Thursday, consumer bankruptcies dropped 14.8 percent in May compared with April. Compared with May 2010, the number of filings was off 15.7 percent.
All together in the U.S. in 2010, some 1.5 million people filed for personal bankruptcy. That was the highest numbers since before 2005, when the law was overhauled to chain consumers more tightly to their debts, but if current trend persist, 2011 will not top 2010 in that unfortunate statistic.
Part of the reason for the recent decline is probably that it’s now harder for consumers to get up to their eyeballs in debt than it was in the mid-2000s. “The continued drop in bankruptcies during 2011 reflects the pull-back in consumer credit over the past year, and a reduction in household debt,” said ABI executive director Samuel J. Gerdano in a statement.
Rating Agency Warns Congress on Debt-Ceiling Chicken
Speaking of debt, Moody’s had a message for the United States of America on Thursday–that is to say, for the Congress of the several states, who may be inclined to play chicken with the debt ceiling this summer. Namely, “if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the U.S. government’s rating under review for possible downgrade, due to the very small but rising risk of a short-lived default,” Moody’s said in a statement.
But that’s not all. The rating agency also asserted that even if default is avoided, “the AAA rating would likely be affirmed after any review. Whether the outlook on the rating would be stable or negative would depend upon whether the outcome of the negotiations included meaningful progress toward substantial and credible long-term deficit reduction.”
Wall Street (and other equities market, too) was still a little wobbly on Thursday, but didn’t take a long slide downward as it had the day before. By the end of the day, the Dow Jones Industrial Average lost only 41.59 points, or 0.34 percent, while the S&P 500 declined a slight 0.12 percent. The Nasdaq actually posted a gain, but only 0.15 percent.