Slow-motion recovery keeps unemployment high

May 28, 2010 at 12:00a.m.

Associated Press

WASHINGTON

High unemployment isn’t going away.

The slow pace of economic growth shows the recovery is too weak to generate enough jobs for 15.3 million unemployed people. Layoffs are contributing to the problem. That’s evident from an elevated number of weekly claims for jobless aid.

Two government reports Thursday offered new evidence on all of those fronts.

For many Americans, it doesn’t feel much like a recovery.

The unemployed face fierce competition for job openings. Those with jobs are watching their paychecks shrink. A growing number of people are at risk of falling into foreclosure. And only people with the most stellar credit are likely to get a new loan.

“We’re out of recession, but the recovery is not going to bring a whole lot of smiles,” said Joel Naroff, of Naroff Economic Advisors.

The economy grew at a 3 percent annual rate from January to March, according to a new estimate released by the Commerce Department Thursday. The new reading, based on more-complete information, was slightly weaker than an initial estimate of 3.2 percent a month ago.

Consumers spent less than first estimated. Same goes for business spending on equipment and software. And the nation’s trade deficit was a bigger drag on economic activity. Those factors led to slower growth last quarter than first estimated.

In a separate report, the Labor Department said the number of newly laid-off workers filing claims for unemployment benefits fell to 460,000 last week. But the latest level of claims is actually higher than it was at the start of the year.

By this point in the recovery, economists had hoped claims would be in the 400,000 to 425,000 range. That would signal more-robust job growth was on the way.

The economy did add a net 290,000 jobs in April, the most in four years. But much-stronger job growth is needed to drive down the 9.9 percent unemployment rate.

Wall Street looked past the disappointing U.S. economic reports and focused on China. Stocks soared after China reassured investors it doesn’t plan to sell any of the European debt it holds. The Dow Jones industrial average gained 284.54 points to close at 10,258.99.