It seems like only yesterday that Barack Obama was telling his $35,000-a-plate cronies that the economy was much stronger than everyone thought it was, and he really ought to be taking a victory lap for his “achievements.” When that “achievement” is six years of grinding high-unemployment, low-growth malaise and the biggest food-stamp program the world has ever seen, purchased at the cost of very nearly doubling the national debt in a single Presidency, there’s nothing to celebrate. And the pretense that a “recovery” is under way ended with today’s release of the August unemployment report, as reported by the Associated Press:
U.S. employers added just 142,000 jobs in August, snapping a six-month streak of hiring above 200,000 and posting the smallest gain in eight months.
The unemployment rate fell to 6.1 percent from 6.2 percent, the Labor Department said Friday. But the rate dropped because more people without jobs stopped looking for one and were no longer counted as unemployed.
Employers also added 28,000 fewer jobs in June and July than the government had previously estimated.
The weaker-than-expected figures make it unlikely that the Federal Reserve will speed up its timetable for raising interest rates. Most analysts expect the first rate hike around mid-2015.
August’s job gains were far below the average monthly increase of 212,000 in the past 12 months. The slowdown was unexpected after most recent economic data had suggested that the economy was growing at a healthy pace.
Ah, the return of “unexpected” economic news! It’s been, what, three months since the media greeted each new piece of disappointing news with a ritual cry of “UNEXPECTEDLY!” Hope you enjoyed Recovery Summer V, everyone!
On the bright side, much of the highly-touted “gains” of the latest Recovery Summer were in low-paying, part-time, and temporary work, and those areas also make up for a good deal of the lost ground in August, so that’s kind of a wash. It’s not so much that August was uniquely horrible, as that the past three months weren’t nearly as good as advertised. Let’s raise the minimum wage and blow that weak entry-level market to smithereens! Then we can have a food stamp program for the ages!
After several months of telling us to read too much into halfway-decent job reports (a 212,000-job average is nothing to get excited about, but at least it’s above population growth), the Administration will now resume telling us not to read too much into any one jobs report. The way Team Obama stammers out this demand as sweaty political spin is amusing, but in truth, three-month and six-month averages are more reliable trend lines. It really takes three months to get an accurate picture of any given month’s data, which is why you often see significant revisions to the past two months in each new report.
The current long-term trends were never pointing toward a robust recovery, never mind the incredible boom we’d need to fill the hole Barack Obama dug; it would take years to restore George Bush’s workforce at a steady 212,000 jobs per month. And “steady’” doesn’t mean “a level we occasionally hit in two- or three-month spurts.” This is really not a good time to learn the workforce is still deflating. There were some hopeful signs the wounds were beginning to scab over in previous months, but now we’re back to people dropping out. A truly robust recovery would see the “headline” unemployment rate ticking up as a great surge of people returned to active job-seeking. It looked like that might have been happening last month, but not any more.
We really need a lot more than a modest “recovery” six years into the Obama presidency, and we’re not even getting that. Of course, there’s a good deal of finger-crossing about how August will prove to be a “blip” or “glitch,” and not all of t is coming from Administration flacks. Nobody wants to make things worse by scaring consumers out of shops, and investors out of the marketplace.
The wishcasting at the end of the Associated Press report is rather muddled:
Americans are willing to spend on new cars: They bought 1.58 million in August, 5.4 percent more than a year earlier and the best August showing in 11 years.
In July, builders ramped up spending on construction projects by the most in more than two years, the government said this week. That is likely supporting economic growth in the July-September quarter.
And U.S. exports rose in July, narrowing the trade deficit. A smaller trade deficit can boost growth because it indicates that more of the goods and services that consumers and businesses buy were made in the United States.
Those reports suggested that the economy could grow at about a 3 percent annual pace in the second half of this year. That would mark a sharp improvement from the 1.1 percent annual rate in the first half.
But the slowdown in August hiring also signals that Americans may need to spend more to boost growth and ensure that hiring remains healthy in the months ahead.
If the trade deficit is smaller because exports are up, it doesn’t mean Americans are buying more products made in America. It means foreign customers are buying more products made in America. Still nice, but not the same thing.
ZeroHedge sees the internals of the August report throwing more cold water on the hoary old dodge that our collapsing workforce is a “structural” problem that has nothing to do with government policies – i.e. it’s just a population surge of older people dropping out of the workforce. On the contrary:
It was only two months ago that the Census wrote the following: “Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)… Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings.”
So yeah… sounds like most of the decline in the participation rate is not structural in nature and is merely a response to what everyone but the 1% sees as the biggest – and ongoing – economic devastation perhaps in history, papered over conveniently for the 1% with trillions in liquidity injections.
In any event, no matter how you spin it, today’s data was bad: because not only did the headline data disappoint, the labor force participation rate dropped once again to 62.8% from 62.9%, matching the lowest since 1978, as a result of the people not in labor force rising once again, and hitting a new all time high record of 92,269,000, up 268,000 from the prior month. In fact, in August the number of people not in the labor force increased by nearly double the number of people who found jobs, which as we reported previously, was only 142K.
As the latest “income inequality” data indicate, Obama’s strategy for remaining in power after choking the private-sector economy into a stupor involved pumping money from the Treasury directly into Wall Street, generating the mixture of great stock market headlines and horrible unemployment reports we’ve been seeing for years. That strategy might give the President’s apologists a few talking points for the Sunday shows, but it’s not generating robust job growth (much less what the American people really want, robust career growth.) It’s creating an environment in which rich people with good political connections, and investment portfolios designed to soak up those Treasury-financed “liquidity injections,” are doing extremely well, but everyone else is either looking at flat or declining income. The great irony of the left-wing Occupy Wall Street movement is that the most left-wing President of the modern era had already occupied Wall Street, long before the protesters got there.