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Tuesday, July 19, 2011

Unemployment Rises as Politicians Debate Debt Ceiling

Gallup modeling of its early July unemployment results suggests that the government will record an increase in June's 9.2% seasonally adjusted U.S. unemployment rate when it reports the July rate. While the nation's political leaders do battle over raising the debt ceiling and related federal budget issues, the jobs situation continues to deteriorate -- something the federal government won't officially report until early August. Gallup Daily tracking of the U.S. unemployment rate shows an increase from 8.7% at the end of June to 8.9% on July 15. Gallup's unemployment numbers are NOT seasonally adjusted so they average lower than the government's numbers at this time of year. While Gallup's survey process differs from the government's in other ways, the most recent surveys include the week the government uses to compile its data. This means Gallup's data can provide insight into July's unemployment situation now, while the government won't report on it until Aug. 5.

It appears companies may be holding back on hiring in response to the increasingly uncertain operating environment. While the economic soft patch clearly plays a major role in management's uncertainty about their company's prospects in the second half of 2011, the turmoil in the nation's capital -- and its negative impact on consumer confidence -- may be creating a temporary new hiring freeze at some companies.

U.S. political leaders may already be considering what they can add to the debt ceiling legislation to encourage job creation. If not, Gallup's most recent unemployment results suggest they should be.


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