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In fact, the main reason the unemployment rate declined last month was not an inspiring one: Hundreds of thousands of people, some discouraged by their failed job searches, 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. All told, 14.5 million were out of work in July.

Job-seekers are finding it harder to get work because there are so few openings. A record 4.97 million people had been unemployed six months or longer in July. And the average length of unemployment grew to 25.1 weeks, also a record.

For those with jobs, the latest report was more heartening. With companies feeling a bit better about the economy's prospects and their own, employees got to work more hours and saw their paychecks grow.
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The funding Obama devoted to get high-voltage lines ready for handling the additional load of alternative supplies is less than 5 percent of the $130 billion that power users, producers and the U.S. Energy Department say is needed.

Without more investment, cities can’t tap much of the renewable energy from remote areas, said Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. He serves as the administration’s top official on grid issues and recognizes the dilemma it faces.

“As we add more and more wind power, the grid will get more stressed, and there’s going to be a point where the grid can’t handle any more,” Wellinghoff said at an energy conference in Chicago. “The first thing we need is to build out transmission.”

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Texas Misstep

The consequences of failing to improve the grid played out last year in Texas, the biggest U.S. generator of wind power with 7,907 megawatts, enough to supply about 6.3 million homes. When winds died in February 2008, utilities had to cut power to factories and offices as output dropped 82 percent.

Texas’s transmission network is mostly independent of the nation’s. Without added power lines, operators were unable to draw enough replacement electricity to keep businesses supplied.

“The rule of thumb is by 2011 we need to see significant upgrades” to avoid such shortages caused by the intermittent, unreliable nature of renewable-energy sources, Gabrielski said.

The outdated network led to the nation’s worst blackout six years ago this month. It cut power to 50 million people in eight states and the Canadian province of Ontario, causing about $10 billion in damages.

Obama targets 25 percent renewables by 2025, more than five times the current amount, excluding hydroelectric, the Energy Department says. That would add about 272,000 megawatts to the grid’s capacity of 830,000, further straining a transmission system largely built more than five decades ago.

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Pickens’s Wind Farm

The lack of lines forced Pickens to shelve a $10 billion Texas wind farm last month. He is searching for a place with transmission capacity for the 667 turbines his Mesa Power LLP ordered from General Electric Co.

Upgrades face opposition from state officials who want to retain control. Southern California Edison, based in Rosemead, canceled a plan to import solar power from Arizona in May after state regulators there criticized the project as a “230-mile extension cord” that wouldn’t benefit their residents.

On June 17, the Senate Energy and Natural Resources Committee voted 15-8 for a bill that would give FERC the ability to overrule state objections to the siting of interstate power lines. The panel’s chairman, Democratic Senator Jeff Bingaman of New Mexico, sponsored the legislation.

Without addressing such issues, only so much solar, wind and other new-energy sources can be loaded onto the grid, said Tucker Twitmyer, who helps manage $380 million in energy technology funds for EnerTech Capital in Wayne, Pennsylvania.

“Reliability remains the top priority for utilities,” Twitmyer said. “That’s a natural boundary in terms of what can be done with renewables.”

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Obama’s $787 billion stimulus plan to end the deepest U.S. recession since the 1940s dedicates $6 billion in the next two years to expand the country’s transmission system for renewable energy. By contrast, China is spending 23 percent of its 4 trillion yuan ($585 billion) in stimulus to make its grid ready for alternative sources, using advanced electrical technologies from Zurich-based ABB Ltd. and American Superconductor Corp.
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"This morning we received additional signs that the worst may be behind us," said Obama in remarks relocated from a military barracks to the ceremonial surroundings of the sun-drenched White House Rose Garden.

"We are losing jobs at less than half the rate we were when I took office. We have pulled the financial system back from the brink," said Obama, warming to a counter-attack against Republican assaults on his economic policies.

The president argued that his mammoth 787-billion-dollar stimulus plan, financial industry rescues and mortgage crisis measures had revived credit markets, and boosted stock markets on which Americans rely for pensions.

"While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth," Obama said, but he also warned that tough times lay ahead before the economy would be restored to full prosperity.
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US President Barack Obama today said his administration has pulled the American economy back from the brink and the worst of the recession may be over, after a surprise drop in the unemployment rate.

"While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth," Obama said in his remarks on the US economy at White House.

"We have pulled the financial system back from the brink, and a rising market is restoring value to those 401(k)s that are the foundation of a secure retirement," the President said, but also warned that tough times lay ahead before the economy would be restored to full prosperity.
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