American jobs report

Jobs figures take gloss off Obama nomination

Only hours after accepting his party's nomination for a second term, Barack Obama found himself on the defensive over a jobs report that was weak in almost every way.

The Age,

9 September, 2012

The disappointing report leaves the President with fading hopes that the economy will surge ahead before election day and allow them to amplify his case that the country is on the road to recovery.

And so on Friday Mr Obama found himself making the complicated argument that the flagging recovery, while not good enough, is at least persistent enough to show that he has put the country on the right path. He has also found himself in the bleak position of having to prove to voters in the 59 days before they head to the polls that despite the sluggish economy and high unemployment, Americans would be even worse off with Mitt Romney at the helm.

''It's certainly not what I would call the position we wanted to be in at this point in the race,'' one Obama administration official said.

''He's going to have to make the case that we wouldn't even be at 8 per cent if it weren't for him.''

For the past two years Obama based his campaign on the argument that Democrats had reversed an economic free-fall and helped put millions of people back to work.

But that argument has proved harder to make with middling-or-worse jobs reports month after month. The August report shows that the unemployment rate fell only slightly, and even that drop was largely because thousand of workers had given up looking for jobs.

The pace of job growth was ''not good enough'', Mr Obama said.

The bad economic news, with the August jobs report showing continued misery particularly for the long-term unemployed, electrified Republican pollsters and politicians eager to interpret it as yet more evidence of Mr Obama's failures.

On Friday, Mr Romney made a full-throated argument that Mr Obama was failing as an economic steward, referring on Twitter to the Democratic National Convention as a party and the jobs report as the hangover.

''There's almost nothing the President has done in the past 3½, four years that gives the American people confidence that he knows what he's doing when it comes to jobs and the economy,'' Mr Romney said.

His supporters joined in.

''If this labor market were a horse, they'd send it to the glue factory,'' said Andrew G. Biggs, an economist at the American Enterprise Institute, in a statement. 

''Lucky for the horse, the factory is closed, too.''

Economic growth slowed through the first half of the year, leading many economists, including those at the Federal Reserve, to raise their year-end unemployment forecasts. US businesses added only 96,000 jobs last month, below expectations.

Calamity Economy Strikes Again, But Hope Is Back In Vogue

Testosterone Pit,

7 September, 2012

Hope was once again in vogue Thursday night in President Obama’s acceptance speech, after having gone the way of the green shoots. Hope has been swirling around the financial markets as well. The Fed keeps dangling QE3 out in front of them. And ECB President Mario Draghi injected a mega-dose of it with his bond-buying promise. It goosed the markets even more and powered them to multi-year highs.

Then came the jobs report. Only 96,000 non-farm jobs had been created—assuming that number is credible, despite the statistical cosmetic surgeries that are used to beautify it. Worse, June and July were revised lower by 41,000 jobs. The unemployment rate, which dropped from 8.3% to 8.1%, is just noise, and it remains unclear if it measures anything at all. But it will be THE number, the political number, that President Obama will focus on, and if all goes according to plan, it will obligingly drop to 7.9% before the election.

But the jobs report also contained the Employment-Population Ratio. By comparing the number of employed people to all people over sixteen, it outlines in unvarnished brutality the real employment situation. And it goes back to when dirt was young.

From 1948 through the mid-sixties, it bounced up and down between 55% and 57%. As women entered the workforce in greater numbers, it zigzagged to 64.7% in April 2000. Then it declined, with some ups and downs, to 62.9% by January 2008—and fell off a cliff. In December 2009, it hit bottom at 58.2%.

At the time, the Fed’s printing press had been running white-hot for a year. Congress was shoveling stimulus money in every direction. Federal deficits had ballooned beyond $1 trillion for the second year in a row. The new President had gotten his feet on the ground. Stock markets were rocking higher. But the employment-population ratio hit a low not seen since May 1983.

So then the magnificent jobs recovery started. And in August 2012, when our national debt blew through the $16 trillion mark, the employment-population ratio was ... 58.3%.

Just about where it was in December 2009, when the unemployment rate hovered around 10%—and now it’s 8.1%. Miracles of statistical cosmetic surgery.

 

It is true, I suppose, that since December 2009, quite a few jobs have been created. I can see that in San Francisco and Silicon Valley. It’s just that the population has grown at about the same pace, and the job market as seen by the average job seeker hasn’t improved much.

The graph is also a visual depiction of what the Pew Research Center calls “The Lost Decade of the Middle Class,” during which “the middle class has shrunk in size” and has “fallen backward in income and wealth.”

It’s convenient to blame President Bush for the precipitous decline of the employment-population ratio under his watch, or President Obama for the continued decline and the long stall. But Presidents don’t have a lot of power in managing the economy—Congress and the Fed are the go-to places for complaints in that department.

Purposefully overshadowed by the jobs report was Intel. After having already dialed back hopes in July, it slashed its third-quarter revenue outlook by 7.7%. Ominously, it saw weakness in the enterprise segment and in emerging markets. On Wednesday, it was FedEx that had cut its outlook due to lower shipping volumes. Last week it was the International Air Transport Association that had gored hope: in July, air-freight was 3.2% lower worldwide than last year, and 3.6% lower for North American airlines. July was also the month when bellwether UPS issued disappointing quarterly results. It appears the “recovery” has run its course.

And that despite the gargantuan stimulus of a Federal deficit that has been over $1 trillion for five years in a row—thanks to our ever so effective Congress, abetted by the Fed. But occasionally, even slick politicians accidentally say something meaningful. This time it was German Chancellor Angela Merkel who’d wondered out loud if politicians can win elections “if we don’t always spend more than we take in.”

The answer, Mrs. Merkel, at least in the US, is no. And so we’re stuck with huge deficits and our calamity economy. But then there’s always the hope that the Fed will print us more moolah so that the financial markets will rock, despite the economy [read.... Monsters With Acronyms: From A Nation of Investors To A Nation of Fed Watchers].

The US is no longer the safest place to invest, as China and India rise to superpower status, says Don Coxe, a strategic advisor to the BMO Financial Group. And financial products based on mathematical formulas? “The equivalent of mixing sewer water with tap water and claiming that because there was more tap water than sewer water in the glass, it was safe to drink.” Read the pungent interview.... “Invest in What China Needs to Buy.”