Outlook Still Shaky Despite Jobs Gain in July
August 7, 2012 11:52 am
The Bureau of Labor Statistics released its monthly jobs report Friday, bearing the unexpectedly high July growth rate of 163,000 new jobs — more than double the adjusted number of 64,000 jobs added in June. Both President Obama and Mitt Romney immediately seized on the new numbers as a instrument of political gain.
Obama referred to the report as an indicator that, “Those are our neighbors, family members finding work and the security that comes with work.” Romney on the other hand referred to the slight uptick of the unemployment rate to 8.3% as, “another hammer blow to America’s middle class.” General knowledge has monthly job gains over 150,000 as a boon to Obama’s political future, with job gains under 100,000 helping Mitt Romney, but the reality of the situation is that the pain of the recession if far from over, and even if job growth remains static around 150,000 per month, the modest gains will be too little to help the 43 states that have not recovered from the downturn.
Professional and business services (white-collar) added 49,000 jobs, and manufacturing was up as well, with 25,000 new jobs, including 12,800 in the auto industry. Local and state governments continued to struggle (no surprise), losing 9,000 jobs in July. (Overall, the public sector has shed 648,000 jobs since Obama took office.) The construction sector remained largely unchanged. As stated previously, the unemployment rate jumped slightly (one-tenth of a percent) to 8.3%, due largely to an influx of new job-seekers. Joblessness fell about half a percentage point for African-Americans, and a full percentage point for Latinos.
Unease around fiscal policy contributing to recovery didn’t stop with the higher-than-average numbers. Many analysts feel that Europe’s chaos and the forthcoming fiscal cliff could contribute to a difficult economic picture for the second-half of 2012. In a letter to investors, Michelle Meyer, senior U.S. economist for Bank of American Merrill Lynch, gives her prognosis on growth as it relates to consumers:
While this is better-than-expected news, it does not change our cautious outlook for the second half of the year. We continue to believe that the uncertainty from the fiscal cliff combined with spillover from the crisis in Europe will result in slower growth in the U.S. Businesses will likely hold off capital expenditures, and households will likely postpone big-ticket purchases.
Prior to the release of the report, the Fed indicated that it would not take new action to stimulate the economy, but will continue to swap short-term bonds for longer-term bonds, and may discuss further easing policies at their September meeting.
Greg Sargent, writing for the Washington Post, lashes out against those who view the job outlook simply as political currency heading into November:
Part of the problem is that we tend to analyze the economic news through the prism of the presidential race, rather than as a window on to a genuine humanitarian crisis that has inflicted years of suffering on millions and millions of Americans. (Don Peck’s excellent book documents the extent to which mass unemployment, and the wrenching changes that are occuring in the wake of the Great Recession, are taking a severe social, cultural, and psychological toll on those who have been hit hardest by it.) And so, if the jobs numbers are above 150,000 — the benchmark set by many analysts — that’s seen by Obama partisans as “good news.” If they are below that, or below 100,000, it’s “bad news” for Obama. What’s lost in this calculus is that both outcomes continue to represent a status quo that’s unacceptable
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