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Economy stuck on tepid

WASHINGTON — The economy's spring slump appears to be extending into the summer, according to data released Thursday.

Layoffs are rising and economic growth is projected to pick up this fall, but not enough to give businesses confidence to hire and speed the recovery.

Economists are forecasting a third straight month of feeble hiring in July, based on the latest round of data. Expectations are the economy added 50,000 to 100,000 net new jobs this month. That's not enough to keep up with population growth and far below what is needed to lower the unemployment rate, which was 9.2 percent last month.

"We're going to see improvement, but right now nothing's improved yet," said Joshua Dennerlein, an economist at Bank of America Merrill Lynch.

Applications for unemployment benefits rose last week by to a seasonally adjusted 418,000, the Labor Department said. They have now topped 400,000 for 15 straight weeks. Applications had fallen in February to 375,000, a level that signals healthy job growth.

The Conference Board projected modest growth for the economy in the coming months based on its latest reading of its leading economic indicators. The private research group offered a caveat: U.S. lawmakers must agree to raise the government's borrowing limit and avoid a catastrophic default on the debt.

The federal government has reached its borrowing limit of $14.3 trillion, and the Obama administration says the government won't be able to pay all its bills if the cap isn't raised by Aug. 2.

Congressional Republicans have demanded steep spending cuts in return for raising the limit. The White House wants to raise some taxes as well, which House Republicans adamantly oppose. The impasse has lasted for weeks.

The economy expanded only 1.9 percent in the January-March quarter. Analysts forecast even weaker growth for the April-June period. The government gives its first reading for second-quarter growth next Friday.

Federal Reserve Chairman Ben Bernanke has acknowledged that some troubles, such as depressed housing markets and tight credit, might be hard to shake.

Home sales in June fell for the third straight month and are lagging behind last year's sales, which were the fewest in 13 years. Declining home prices have made consumers feel less wealthy and forced some to cut back on discretionary purchases. Sales of appliances, electronics, furniture and sporting goods have dropped for three straight months.

Employers have responded by reining in hiring. They added only 18,000 net jobs in June, the second straight month of dismal job gains. That's far below the average of 215,000 net jobs per month the economy averaged from February through April.

Some companies are cutting their work forces. Layoffs rose to their highest level in nine months in May, according to a separate Labor Department report last week.

Economy stuck on tepid 07/21/11 [Last modified: Thursday, July 21, 2011 10:06pm]
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