The United States Department of Labor reported today that U.S employers added 96,000 jobs last month, while the unemployment rate fell from 8.3 percent to 8.1 percent.
The dismal August jobs report contradicts the message that the nation is on a “stable trajectory of positive job growth” that the Democratic National Committee spent the last three days crafting. Speaker after speaker at the just concluded DNC convention in Charlotte, NC spoke in support of President Barack Obama’s plan for the economy, arguing that he has been successful in forming a long-term plan that has the nation on a secure, all be it slow, path to recovery and that given a second term millions of jobs would be created- today’s jobs report challenges that view.
While a decline in the unemployment rate would seem to be positive news, the opposite is true. A rate drop as a result of people going back to work would be cause for celebration, but that is not the reason for the drop. More people gave up hope of finding a job and stopped looking for employment in August, which resulted in the decline.
Adding to the unsettling report was the adjustment downwards of the number of jobs created in June and July. The DOL originally reported that 80,000 jobs were created in June, with 163,000 being added in July. The revised numbers saw June with 64,000 while July fell to 138,000.
Four of the last five months have seen less than 100,000 new jobs created, and the economy has added just 139,000 jobs a month this year, 10 percent below 2011’s average of 153,000.
Additional Discouraging News in the Report
-The proportion of the population that is either working or looking for work fell to 63.5 percent, the lowest level in 31 years for the labor force participation rate.
-Average hourly wages dipped slightly to $23.52 and are only slightly ahead of inflation in the past year.
-The average work week was revised downward in July to 34.4 hours, and remained unchanged for August. The number of temporary jobs fell for the first time in five months. These two figures indicate that companies need fewer workers due to less demand for their services.
-Manufacturing jobs fell by 15,000-the biggest monthly drop in two years.
Fed Chairman Ben Bernanke last week said the labor market’s stagnation was a “grave concern,” a comment that raised expectations for a further easing of monetary policy as soon as the central bank’s meeting on Wednesday and Thursday. The central bank has held interest rates close to zero for nearly four years and pumped about $2.3 trillion into the economy through two bouts of bond buying.
Many economists blame fears of the so-called U.S. fiscal cliff, the $500 billion or so in expiring tax cuts and government spending reductions set to take hold at the start of next year unless Congress acts, and Europe’s long-running debt problems for the slowdown in hiring. Europe’s financial crisis has pushed the region’s economy to the edge of recession.
GOP nominee Mitt Romney said “President Obama just hasn’t lived up to his promises, and his policies haven’t worked” in a statement soon after the release of the report.
In his speech Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy and asked voters to remain patient.
“The truth is, it will take more than a few years for us to solve challenges that have built up over the decades,” Obama said.
The Obama team will spotlight that August was the 30th straight month of private-sector job growth, as is evidenced by the statement released by Secretary of Labor Hilda L. Solis on the August employment report. Republicans will argue that gains would be more robust under a Romney stewardship.
No president since Franklin D. Roosevelt during the Great Depression has been re-elected with a jobless rate over 8 percent. This year’s election is likely to be decided on whether voters see the economy as improving, remaining stagnant or getting worse under Obama.
There will be two additional employment reports before the election.
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