Unemployment flat, economy in neutral

On Thursday, the Labor Department announced that the number of people applying for unemployment has remained virtually the same. Applications fell by only 1,000 and are now at a seasonally adjusted figure of, 404,000.

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LOS ANGELES, CA (Catholic Online) - The number of applications show that the US economy remains stagnant and has a way to go before it can be considered truly healthy. For the economy to be considered healthy, unemployment applications would need to fall below 375,000. Such a figure would indicate sustainable job growth, but they haven't been that low since February.

While the report suggests that the recent trend has been downward, it also suggests that hiring has not increased. When the applications are around 400,000, they indicate to economists that we have a neutral economy that is neither growing nor contracting.

Some economists regard the neutral readings as good news. Recession fears have grown in recent months but a neutral economy is not an economy in recession. While it may not be growth, neutral is certainly better than recession.

Economists say that employers reduced hiring after rising gas prices reduced consumer spending. They also cited Japan's major earthquake which disrupted supply chains has slowed down US auto production.

In more recent months, gas prices have begun to fall and supply chains have resumed operating at normal levels. While employers have added only an average of 72,000 jobs in the past five months, which is well below the 125,000 per month needed to keep up with growth, it is still better than what many economists had predicted.

In September, the economy generated a net of 103,000 jobs. And while this reduces concern over another recession, it does not do anything to reduce the 9.1 percent unemployment rate. Unemployment has been at this figure for three months in a row.

Approximately 6.8 million people are receiving unemployment benefits according to the last available data taken from September 24.

The economy still needs more jobs and pay increases, otherwise consumers are unlikely to increase their spending. Because consumer spending accounts for 70 percent of economic activity these are critical factors.

It is hoped that an improvement in the European economy will inspire confidence worldwide, and that fears of a second great recession can soon be laid to rest. Economists are already looking forward with a hopeful eye to October's figures.

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