• Weak payrolls figure and rising unemployment rate in June
  • Monetary policy to remain very loose

A “jobless recovery” in the US? Nonfarm payrolls rose by only 18,000 in June. In addition, April and May data were revised down. Moreover, the BLS signalled a third consecutive increase in the unemployment rate, to 9.2% in June from 9.1% in May. The reallocation of workers due to the crisis has forced some unemployed to seek jobs in new sectors where they are less qualified. For example, numerous jobs have been lost in the construction sector, while the workforce in education and healthcare has been steadily increasing.

Secondly, the unusually high level of long-term unemployment makes it harder for unemployed to return to the workforce. The extension of the maximum duration of unemployment benefits during the crisis (from 26 to 99 weeks in the majority of states) also served to increase the unemployment rate, all things being equal.

Finally, the housing market crisis hinders the geographical mobility of jobless homeowners, who are sometimes unable to sell their homes, or who can only do so at a price that implies in their view an unacceptably high capital loss. All these factors undoubtedly contribute to push the structural unemployment rate higher than it was before the crisis.