Unemployment Rate Routs Expectations of Economists

Today the US Bureau of Labor Statistics reported that the United States Economy added 288,000 jobs in June dropping the unemployment rate down to 6.1% and obliterating the expectations of 211,000 jobs that were predicted by economists. This could be the signal of something big, something the economy has been waiting for a long time and we call it Recovery Summer.
Over the past few years, there has been a trend, a disappointing summer of job growth would give way to a much stronger winter. This led to economists getting their hopes up and predicting the economy was about to pick up again in the summer. But it seems this June jobs report is about to break the curse.
Now, while this winter’s job reports were better than the summer’s that preceded it, it was still weak compared to the past winter. This is said to be due to an unusually cold winter. It was also reveled last week that the economy contracted at a 2.9% annual rate in the first quarter of the year. To put that in layman’s terms, the economy in the first three months of the year actually shrank.
With these new revelations, economists weren’t expecting much. As a matter of fact, the Federal Reserve already downgraded its growth forecast due to the horrible first quarter GDP number.
But, and there is a but, GDP growth is not a good indicator on the economy’s current state considering it measures how the economy was three months ago, making it somewhat of a backwards looking indicator. Looking at GDP to predict the future is like looking behind you while your driving to predict whats in front of you, it doesn’t really work too well.
If you take a look though at the Forward looking indicators though, it told us a much different story than GDP. “Consumers, businesses and investors are all showing a renewed confidence in the economy” according to NewRepublic.com.
In the past couple weeks, pending home sales hit a four-year high and automakers also reported surprisingly high sales and too top it off, economist were even expecting wage growth.
June has also been the fifth month of consecutive job growth above 200,000 and Over the past 12 months, the economy has nearly 2.5 million jobs. The Bureau of Labor Statistics also revised April and Mays numbers up by 29,000 jobs.
Long-term unemployment too is on the fall. It fell 293,000 to 3.1 million (though it’s unclear if they’re finding employment or just dropping out of the labor market).
Over all, economists, journalists and everyone else can rest easy tonight because this is one of the most positive jobs reports we’ve seen in a while.

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