On Thursday, economists were expecting 150,000 new jobs to be added to the employment rolls. Admitting it wouldn’t really affect the unemployment rate, those economists were hopeful that at least the number wouldn’t be any lower.
On Thursday, Mark Zandi, chief economist for Moody’s Analytics said,
The 150,000 job gain will be politically neutral, not weak enough to help Romney and not strong enough to support Obama’s reelection.
On Friday, we’re wondering what the economists are saying with the paltry 96,000 jobs that were added in August.
It’s been a tough week for the Obama Administration as it was supposed to be focused on the Democratic National Convention and the improvements the administration as whole has made during Obama’s presidency. Instead, the national debt climbed to $16 trillion, a devastating report on the number of Americans receiving food stamps was released and now, just hours ago, the unemployment numbers came out and they were significantly lower than even the generous numbers economists had been hoping for.
It is a Momentum Killer
The numbers came about ten hours after Obama’s acceptance speech in Charlotte. One analysts said,
The jobs report might not be the momentum killer for Obama some are expecting. It could provide a surprising lift for the president if the numbers beat expectations.
Hopes for that scenario were shattered on Friday morning. Not only that, but Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, said he “fully expected” another net positive when it comes to private sector jobs. In face, he used that to deflect GOP narrative that Americans are not better off than they were four years ago.
For several days, the dems were hoping news that the first-time unemployment benefits fell by 12,000 last week would translate into today’s report. There’s no silver lining though. The Labor Department said the jobless rate dropped over the month, to 8.1% from 8.3% in July, but that’s due to many people who have given up and dropped out of the labor market. In a nation where the population is growing, the shrinking labor force suggests that many workers are giving up job searches because they are striking out in the employment market or don’t see good prospects. And then there’s the startling report on new food stamp applicants.
30 Year Drops
The combination of workers and unemployed people who are seeking work out of the total population – or the labor force participation rate – dropped to a 30-year low of 63.5% in August. Average hourly earnings also dipped over the month, the Labor Department said. This means the jobs that were found were accepted at lower rates than what workers had built their lives on. It’s difficult to maintain mortgages, credit card payments and private schools that were secured when a salary was $90,000, but has down dropped to $40,000. It’s the same vicious cycle that’s haunted the country for several years.
Not only that, but it gets worse. The Labor Department also revised downward job growth in July, to 141,000 from 163,000 initially estimated, and it said employers added 45,000 jobs in June, not 64,000 as previously reported. The news couldn’t be worse for Obama supporters who spent significant amounts of time this week defending the president and his economic policies and records. In one fell swoop, it appears any hopes of convincing voters that the economic policies haven’t failed are wasted. Even a private survey that suggested 200,000 new jobs would be announced is wasted.
It’s important to remember that no president since Franklin Roosevelt has been reelected with an unemployment rate above 8 percent.
Manufacturing lost 15,000 jobs in August, confirming recent indications of slowing orders and exports. Employment in the temporary-help sector, which is often indicative of broader hiring trends dropped as well by 4,900. Of the job gains, 28,000, or 30% of the 96,000 net new positions, were in food and drinking establishments, which typically pay lower wages and offers fewer hours for people.
Romney insists Obama’s failures in the White House warrant a change in leadership, and argues he’s the candidate with the business background needed to bring the country out the economic downward spiral. Today’s report and the week in general certainly lends to his declarations. The fact the election is less than two months away has many thinking, “It’s too late”.
It does appear, however, that the Federal Reserve is now seen as even more likely to announce a new round of bond-buying economic stimulus when the central bank meets next week. It’s just one more Band Aid on an economy that’s in desperate need of much more than a quick fix. Whether or not it affects voters picks in November remains to be seen. If there was ever bad timing, it was this year’s DNC that continued as though the bad news never existed. Perhaps that’s why many say it’s indeed time for a change.
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