Joblessness Dips to 7.7%, Showing Trace of Growth

The U.S. unemployment rate edged down in July to 7.7%, reflecting a slight pickup in the long-sluggish national economy and a temporary boost from an expanded federal summer jobs program for underprivileged youths, the Labor Department reported Friday. In June, the rate hit a recessionary high of 7.8%.

California’s jobless rate also declined, to 8.9% in July from 9.5% the month before, but economists attributed the drop partly to a statistical quirk and said the state remains in a recession. The news was far worse for Los Angeles County, whose volatile jobless rate leaped more than a percentage point to 11.2%, its highest mark since February, 1983.

At a White House news conference, President Bush touted the figures showing that 198,000 payroll jobs were created in July. While 75,000 of those jobs came from the short-term summer jobs program expanded after the Los Angeles riots, the overall gain is the biggest in more than two years.

“Some good precursors of stronger growth are definitely in place,” Bush said, citing declining interest rates and low inflation.

Democrats, however, were skeptical. Campaigning in La Crosse, Wis., Democratic presidential nominee Bill Clinton said the July dip in unemployment did not change the fact that “most Americans are working harder for lower pay than in 1980. That cannot be turned around without a new economic plan that goes way beyond trickle-down economics.”

Most economists said the national figures reflect slow progress and that prospects for a “triple-dip” recession are fading.

“This is not the kind of report that would engender optimism about rapid growth,” said Joseph A. Wahed, chief economist for Wells Fargo Bank in San Francisco. “All it tells us is that the economy is growing, but it’s growing slowly.”

“The picture is of an economy that is recovering, but not very strongly,” said Lynn Reaser, chief economist for First Interstate Bancorp in Los Angeles.

In Orange County, the jobless rate rose to a nine-year high of 6.7% in June, the latest figure available. The increase, from 5.9% in May, was fueled largely by a seasonal surge of students and teachers seeking work as the school year ended. At the same time, however, the total number of full- and part-time jobs in the county rose by about 3,000 from May to a high for the year of 1.14 million.

Wall Street appeared uncertain on how to gauge the Friday’s news. The Dow Jones average of 30 industrials, up about 30 points at one point in the day, finished with an 8.38-point loss to close at 3,332.18. Treasury bond prices rose sharply, however, apparently on the expectation that the Federal Reserve might ease interest rates further to stimulate the economy.

Nationally, 9.76 million Americans were unemployed last month, down by 215,000 from June, according to a survey of households. Contributing to the improved unemployment rate was a halt in the rapid increase in the number of job hunters, with the labor force holding steady at 127.5 million.

A separate survey of employer payrolls, which most economists consider the best barometer of the labor market, showed that many of the 198,000 jobs gained came in local government--largely because of the summer youth employment program. Most of the other increases came in the service industries.

For instance, restaurants and bars added 20,000 jobs, while other areas of retailing remained soft, apparently as a result of weak consumer spending.

Construction employment, meanwhile, fell 15,000, declining for the second month in a row.

Manufacturing contributed only 1,000 new jobs. Yet the manufacturing increase followed a loss of 52,000 such jobs in June and came despite a July decline of 17,000 in defense-related industries.

The overall July gain in employment also marked a rebound from a loss of 63,000 jobs in June. At the same time, economists were discouraged by a separate finding that the length of the average workweek was unchanged at 34.3 hours.

In another sign of economic weakness, the number of people who want full-time jobs but settle for part-time work climbed about 300,000, to 6.3 million.

Among blacks, the unemployment rate fell to 14.6% from 14.9%, while joblessness among Latinos dropped to 11.9% from 12.1%. The rate among whites was 6.7%, down from 6.8%.

Teen-agers posted the highest unemployment rate among all demographic groups, at 21%, down from 23.6% the month before.

The struggling economy has emerged as one of the major issues of the presidential campaign. The Bush Administration has been frustrated in its efforts to portray the economy as recovering slowly but surely; the Clinton camp has hammered away at what it terms failed GOP economic policies.

Bush said Friday that the nation is “poised for a strong recovery,” but he conceded that the economy still is performing “anemically.” In what has become his standard refrain on the nation’s unemployment problems, Bush said: “I simply cannot be satisfied until every American that wants a job has one.”

The Democrats jumped on his statements. “Contrary to his claims, the economy isn’t getting any better,” said House Majority Leader Richard A. Gephardt of Missouri.

“I think it is very interesting,” Clinton added, “that just last week the White House refused to assume any responsibility for the problems of the economy, and when it (jobless rate) drops one-tenth of a point, they say, ‘well, here we come.’ ”

The economy is a major factor in Bush’s poor standing in polls of California voters. The state economy has been hard hit by continuing losses of defense and other manufacturing-related jobs.

California’s unemployment rate, the fourth-highest among the nation’s 11 biggest states, fell partly because the labor force dropped by 36,000 to 15.2 million as many people gave up the search for work. In California, the number of jobless people stood at 1,364,000 and employment totaled 13,881,000.

Economists noted that public education employment climbed by 11,000, but they attributed that to the failure of government officials to adjust the figures to account for the spread of year-round schools.

Overall, the California economy showed a gain of a scant 4,100 jobs for the month. In perhaps the most distressing sign, California lost another 7,800 manufacturing jobs, reflecting the continuing decline in the defense industry.

“We’re still in recession, and the recession will extend into next year,” predicted David Hensley, director of the UCLA Business Forecasting Project.

And Los Angeles County, Hensley said, is “probably the focal point of California’s problems.”

Economists generally discount one-month swings in the county’s volatile jobless rate because of the small household survey used to calculate it, but they said there is ample evidence that Los Angeles’ economy still is sinking. The county’s unemployment rate of 11.2% was up from 9.8% in June.

“It’s just a continuation of what we’ve been seeing, with declining employment numbers in just about all of the industries,” said Jay D. Horowitz, labor market analyst for the California Employment Development Department. “We have a way to go before we start pulling out of this.”

In Los Angeles County, the number of people without jobs climbed 71,000 to 518,000 while the number of people employed fell 32,000 to 4,091,000.

Times staff writers James Gerstenzang in Washington and Sam Fulwood III in Wisconsin contributed to this story.

Jobless Rates Drop

Here are U.S. and California unemployment rates, in percentages, over the last 12 months:

U.S. Calif. July, ’92 7.7 8.9 June 7.8 9.5 May 7.5 8.7 April 7.1 8.0 March 7.2 8.5 Feb. 7.2 8.7 Jan. 7.0 8.1 Dec., ’91 7.0 7.7 Nov. 6.8 7.4 Oct. 6.8 7.8 Sept. 6.7 7.7 Aug. 6.7 7.3