Terrible August Jobs Report Shows the Recovery in Tatters
President Obama's case for reelection rests on the idea that while the recovery may be sluggish, we are headed in the right direction. The Obamacrats said that over and over at the Democratic National Convention.
But the August jobs report, out today from the Labor Department, suggests otherwise. First, the basics (via Reuters):
Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, it was largely due to Americans giving up the search for work.
-- – If the labor force participation rate was the same as when Obama took office in January 2009,the unemployment rate would be 11.2%.
-- Since the start of the year, job growth has averaged 139,000 per month vs. an average monthly gain of 153,000 in 2011. Growth is decelerating.
-- -- The broader U-6 unemployment rate, which includes part-time workers who want full-time work, is at 14.7%.
-- Average hourly earnings were unchanged, and up just 1.7% over the past year,matching the slowest pace on record.
I think this analysis from JPMorgan about sums it up:
The more comprehensive employment-to-population ratio ticked down to 58.3%; this measure is a mere 0.1% above its cycle trough, indicating that once one takes account of population growth there has been essentially no progress in repairing the labor market after the recent downturn. In fact, if you go through the details it’s hard to find any redeeming aspects to this jobs report. In terms of the broader economy, today’s numbers should check any enthusiasm that the economy was gaining momentum toward the end of the summer. Instead, the economy appears to remain stuck in the mud.
And that does this mean for the presidential election? Nothing good for President Obama. As analyst Dan Clifton of Strategas Research notes:
The historical relationship between non-farm payroll growth and the pct of vote received in a reelection campaign is very strong. This relationship suggests the President needs to reach 1.1 pct growth to reach the magic 50 pct threshold. After today’s report, the relationship suggests 340k jobs would need to be created next month. The current trajectory suggests the President will receive 49 pct of the two party vote.
But maybe it all doesn't matter. Maybe Americans have accepted that this is the New Normal and agree with Bill Clinton that four years isn't enough time to turn things around. But right now it doesn't look like things have turned around much at all.