Obama: ‘Worst may be behind us’ on economy

WASHINGTON - President Barack Obama told the nation Friday that the "worst may be behind us" on the recession after the unemployment rate dipped for the first time in 15 months.

But he warned that the U.S. had a lot further to go, and more work to do, to drag itself out of the worst slump since the Great Depression.

"Today we're pointed in the right direction," Obama said in an address on the economy from Rose Garden, a few hours after the Labor Department reported the unemployment rate for July declined to 9.4 percent from 9.5 percent in June.

Employers sharply scaled back layoffs in July, slashing a net total of 247,000 jobs, the fewest in a year. That compares with 443,000 jobs that disappeared in June.

Even so, Obama added: "We have a lot further to go. As far as I'm concerned, we will not have a true recovery until we stop losing jobs.

"We have a steep mountain to climb, and we started in a deep valley," Obama said. But he added that he was confident the country could pull itself out of the slump.

The White House said Obama still thinks unemployment will hit 10 percent this year. The Federal Reserve has predicted the jobless rate is likely to top 10 percent in 2009.

The snapshot the Labor Department released Friday offered other encouraging news: Workers' hours nudged up after sinking to a record low in June, and paychecks grew after having stagnated or fallen.

"There's clearly been a turn for the better," said economist Ken Mayland, president of ClearView Economics. "The worst is behind us in terms of layoffs."

Still, the labor market remains on shaky ground. The 247,000 jobs lost in July represent a vast improvement on much higher job losses earlier in the year. But they're a far cry from the positive job growth needed to sustain an economic recovery.

When the economy is healthy, employers need to add a net total of around 125,000 jobs a month just to keep the unemployment rate stable. And to push the jobless rate down to a more normal 5 percent range, it would take stronger job growth — of at least 200,000 jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.

Yet the new figures were better than many analysts were expecting, and they signaled improvements to an economy that has been clobbered by the recession. Analysts had been forecasting that job losses would amount to around 320,000 and that the unemployment rate would tick up to 9.6 percent.

Video   Glimmer of hope in jobless numbers Aug. 7: Jobless numbers drop slightly which gave Wall Street a jolt of hope that the recession may have hit bottom and more prosperous times are ahead. NBC's Michelle Franzen reports. NBC News Channel

The dip in the unemployment rate was the first since April 2008. One of the reasons the rate declined, though, was that hundreds of thousands of people left the labor force. The labor force includes only those who are either employed or are looking for work.

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included the unemployment rate would have been 16.3 percent in July. That's down from 16.5 percent in June, which was the highest on records dating to 1994. All told, 14.5 million were out of work in July.

After fresh revisions, job losses in May and June turned out to be less than previously reported. Employers cut 303,000 positions in May, compared with 322,000 previously logged. And they trimmed 443,000 in June, compared with an earlier estimate of 467,000.

The job cuts made in July were the fewest since August 2008.

The slowdown in layoffs in part reflected fewer jobs cuts in manufacturing, construction, professional and business services and financial activities — areas that have been hard hit by the collapse of the housing market and the financial crisis. There also were fewer layoffs in the temporary-help industry, which analysts watch for clues about future hiring. Retailers, though, cut more jobs in July.

Those losses were blunted by job gains in government, education and health services, and in leisure and hospitality.

The deepest job cuts of the recession came in January, when 741,000 job disappeared, the most in any month since 1949. Since the recession began in December 2007, the economy has lost a net total of 6.7 million jobs.

Slower job losses are occurring because companies aren't cutting investment and spending as drastically as they had been during the depths of the recession, which came in the final quarter of last year and carried over into the first quarter of this year.

MORE FROM STOCKS & ECONOMY

Stocks & economy Section Front

After Mon. dip, Dow ends day back over 10K Job openings fell nearly one-quarter last year Europe searches for way out of debt crisis Wholesale inventories fall more than expected Obama has miles to go to keep all promises Investors worry about Downturn: The Sequel Risk of double-dip recession low, Geithner says Cost of gas off nearly six cents in last two weeks Unemployment rate falls to 9.7 percent Ray of hope clouded by 8.4 million jobless Stocks & economy Section Front   Add Stocks & economy headlines to your news reader: