The unexpected slowdown in August job growth dealt a blow to President Barack Obama’s hopes of gaining momentum coming out of his party convention and gave Republican candidate Mitt Romney another campaign weapon.
Today’s Labor Department report drove the political debate as both candidates stop in Iowa and New Hampshire, two swing states. The labor data showed the economy added 96,000 jobs in August, down from a revised gain of 141,000 in July. While the unemployment rate fell to 8.1 per cent from 8.3 per cent in July, that resulted from more people dropping out of the work force.
The figures were released at a pivot point in the 2012 presidential campaign, with both party conventions finished and the two candidates embarking on a final drive to persuade voters before the November 6 election.
“The timing couldn’t be worse for the president in terms of coming out of a really good convention with some momentum,” said Stu Rothenberg, editor of the nonpartisan Rothenberg Political Report in Washington. “This just steps on that bounce and I think it’s a big problem for the Democrats.”
Arriving in Iowa today for a midday campaign rally in Orange City, Romney said the figures highlight the “clear choice” voters have in the presidential election.
“There’s almost nothing the president has done in the last three and a half, four years that gives the American people confidence he knows what he’s doing when it comes to jobs and the economy,” Romney told reporters in Sioux City, where his campaign plane landed.
Obama made only a passing mention of the jobs figures at his first post-convention campaign event today in Portsmouth, New Hampshire.
“We know it’s not good enough,” Obama said of the payrolls figure. “We need to create more jobs, faster.”
The rest of his speech followed the outlines of his address accepting the Democratic Party’s nomination for a second term last night in Charlotte, North Carolina.
He repackaged familiar administration policies, set a goal of creating 1 million new manufacturing jobs by 2016, and attacked Romney and the Republicans for offering “same prescriptions that they’ve had for the past 30 years.”
Jobs and the economy are the core issues in the race, and they remain a burden for Obama. The unemployment rate has exceeded 8 per cent since February 2009, the longest stretch in monthly records going back to 1948, and economic growth this year is below normal for the post-World War II era. The August report showed 368,000 Americans left the labor force.
While the unemployment rate came down, “it fell for the wrong reason,” Maury N. Harris, chief economist for UBS Securities LLC, said today in a client note.
“I was, candidly, startled by how much the labor force declined,” said Matt McDonald, a partner at Hamilton Place Strategies in Washington who is advising the Romney campaign.
While the unemployment rate is typically the most closely watched by voters, that may be overshadowed by the lackluster growth in jobs, according to Rothenberg.
“The numbers do provide a mixed message with the unemployment rate down and the new jobs numbers very mediocre, rather disappointing, but the bottom line is a net negative certainly for the president and the White House,” Rothenberg said. “I don’t think you can come to any other conclusion other than the economy continues to be disappointing.”
The jobs report comes after a day of positive economic news for Obama and a week before the Federal Reserve Board may consider additional measures to boost the economy during its September 12-13 meeting.
Hours before Obama spoke last night, US benchmark stock indexes rallied to their highest levels in more than four years, highlighting an economic recovery that has propelled corporate profits above pre-recession records. Stocks ended the day mixed.
Romney said he did not believe that additional steps by the Federal Reserve would have much impact, calling the second round of monetary easing “less effective than we had hoped,” and suggesting that Obama is relying on the central bank to spur an economic recovery his policies have failed to create.
A Gallup daily tracking poll taken this week indicated Obama may have gotten a boost from the Democrat convention. Polling from Aug. 31 through yesterday showed him leading Romney among registered voters 48 per cent to 45 per cent. While still within the margin of error of plus or minus 3 per centage points, the gap was the widest since mid-July.
Obama’s approval rating was at 52 per cent, a 15-month high, in the tracking poll over three days ending yesterday.
Both surveys were completed before the jobs figures were released.
White House adviser David Plouffe told reporters traveling with Obama after the Labor Department report that the convention gave a boost to the president.
“That doesn’t mean the race is going to change significantly,” Plouffe said. “But we think that we come out of here with some momentum in terms of putting together the electoral picture.”
Both candidates were making a play for swing states today, with Obama in New Hampshire and Romney in Iowa. The two will switch spots with Obama traveling to Iowa and Romney in New Hampshire. The two states combined have 10 of the 270 Electoral College votes needed to win the presidency and the attention being paid by the campaigns indicates how close they expect the election will be.
The jobs report’s impact extends beyond the campaign. Ben Bernanke, chairman of the Federal Reserve Board, said in an Aug. 31 speech in Jackson Hole, Wyoming, that the stalled labor market is “a grave concern.”
Persistently high unemployment “will wreak structural damage on our economy that could last for many years,” he said.
The economy would have to add about 13.3 million jobs over the next three years, or 370,000 jobs each month, to cut unemployment to 6 per cent. To reach that goal, the economy would have to increase at a 4 per cent to 5 per cent annual growth rate, according to economist Peter Morici at the University of Maryland.
By contrast, the economy grew at a 1.7 per cent annual pace in the April-June quarter, slower than the 2 per cent rate in the January-March quarter and 4.1 per cent in the last three months of 2011.
It has taken the US three years to recover about half, or 4 million, of the 8.8 million jobs lost as a result of the 18- month recession that ended in June 2009.
Private forecasters expected that payrolls in August would increase 130,000 after a 141,000 gain in July, according to the median forecast of economists surveyed by Bloomberg before the department’s report. They expected the jobless rate would be unchanged at 8.3 per cent.
The Romney campaign today said it released 15 new television ads in eight swing states — Florida, Iowa, Colorado, Nevada, New Hampshire, North Carolina, Ohio and Virginia — to “show how we’re not better off under President Obama.” The campaign said the ads would show Romney’s plans for defense, excessive regulations, reducing the deficit, raising home values and increasing manufacturing.
This story Administrator ready to work first appeared on Nanjing Night Net.