Many U.S. job seekers lack the skills needed in a changing economy to bring the 8.2 percent unemployment rate down to the 6.1 percent average over the past decade, according to John Silvia at Wells Fargo & Co.
Americans who lost low-skilled jobs in manufacturing and construction “don’t have the skills to compete in a society that emphasizes science, technology, math, computer literacy,” Silvia, chief economist at Charlotte, North Carolina-based Wells Fargo Securities, said in an interview on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “As a result of that, you’ve got long-term unemployment.”
While the jobless rate has fallen from a 26-year high of 10 percent reached in October 2009, it’s still well above the Federal Reserve’s 5 percent to 6 percent estimate for full employment.
U.S. companies added the fewest number of workers in April in seven months, figures from Roseland, New Jersey-based ADP Employer Services showed today. Employment increased by 119,000 jobs following a revised gain of 201,000 the prior month. The median forecast of economists surveyed by Bloomberg News called for a 170,000 advance.
“Yes, the American economy is creating jobs,” Silvia said. “It’s creating jobs in a number of different areas -- but not at the pace we’re used to in the past, and generally it’s going to be that construction area that’s going to continue to be weak.”
Wells Fargo forecasts a May 4 Labor Department report will show the U.S. economy added from 160,000 to 180,000 jobs in April, though the estimate may be revised depending on the results of an Institute for Supply Management report on service businesses to be released tomorrow, Silvia said.
Nonfarm payrolls, including government jobs, added 160,000 jobs after a 120,000 increase in March, according to the median forecast in a Bloomberg survey before the report.
“The biggest issue for me is distinguishing the business cycle versus the structural change,” he said. “There are structural changes going on in the economy that underlie the cyclical improvement.”
The economy expanded at a 2.2 percent annual rate in the first quarter after a 3 percent pace in the final three months of 2011, Commerce Department figures showed last week. U.S. gross domestic product will probably grow at about 2.2 percent to 2.3 percent this year, Silvia said.
“We have to deal with what we’ve got,” he said. “You have to restructure state and local government, you have to restructure a lot of businesses.”
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