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SHRINKING INCOMES Companies cut workers' hours in March, reducing their average weekly earnings. Pay isn't keeping up with inflation either. In February, inflation-adjusted earnings were 1 percent lower than a year earlier. That means less money to spend without borrowing or dipping into savings. And many consumers are swearing off credit card debt: They cut credit card borrowing by $5 billion this year through February. The Bank of America economists say the income trends are "hardly a positive for consumer spending." JOB-MARKET DROPOUTS The economy has added nearly 1.9 million jobs over the past year, and unemployment rate has fallen from 9.1 percent to 8.2 percent since August. But the job market might not be as strong as those numbers suggest. One broad measure of the labor market's health refuses to strengthen: The percentage of the working-age population that's actually working has been stuck below 59 percent for 2 1/2 years. It hadn't previously, fallen that low since 1984, before many women poured into the work force.
Many economists say millions of Americans have given up looking for work. "People have left the labor force because frankly the prospects for employment remain anemic," says Bank of America economist Neil Dutta. A LOT OF CATCHING UP TO DO The solid job gains of December to February disguised a painful fact: The economy still has a long way to go recover all the jobs lost in the Great Recession and its aftermath. From January 2008 to February 2010, the economy lost 8.8 million jobs. About 3.6 million, or 40 percent, of those have been regained. Heidi Shierholz, an economist with the Economic Policy Institute, calculates that, accounting for population growth, the United States would have to create 350,000 jobs a month for three years to return to pre-recession employment levels. That's nearly three times as many jobs as the economy generated last month. "We're doing better than a total slog," she says, "but we are not getting the really robust job growth we need."
[Associated
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