Payroll Day Blues: Economy Adds Just 96,000 Jobs in August

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Current and former military personnel stand in line for interviews at the Opportunity Job Fair on Sept. 6, 2012 at the old Naval Training Center in San Diego, Calif.

The Democratic party spent all week (and millions of dollars) trying to convince voters to return President Obama to office in November. But perhaps the most important set piece — the August employment situation report — was completely out of their hands. Unfortunately for President Obama and his supporters, the U.S. economy did not oblige, adding only 96,000 new jobs in August, missing economists expectations of 125,000 jobs gained. That number, combined with downward revisions of the previous two months’ figures, takes some of the wind out of the argument the President made last night that the economy is slowly but surely recovering, and that the recent spring swoon — the three months between April and June when there were no more than 87,000 new jobs added — was just a blip on the radar.

If there’s anything worth stressing in an analysis of a monthly jobs report, it’s that you can’t draw any conclusions from just one report or even three. One would be foolish to base a vote for president on one report alone, but there’s no denying that today’s number will at the very least distract from the President’s message and get the nation talking again about our stubbornly poor employment situation. And a deeper look into the numbers doesn’t provide much reason for optimism either. Manufacturing employment actually declined by 15,000 jobs in August, and the average hourly earnings for all employees fell by 1% to $23.52. And the fact that job gains in June and July were revised down from 64,000 to 45,000 and 163,000 to 141,000, means that the total jobs gain in this report from the last is only 52,000.

While this jobs report and the following two will no doubt set the tone for this fall’s presidential election, the more immediate impact might be felt at the Federal Reserve. It was clear from Ben Bernanke’s speech last week that he stood ready and willing to initiate another round of monetary stimulus if economic conditions warrant. The Fed’s dual mandate to promote stable prices and full employment means that the central bank’s chairman will be paying close attention to today’s number, and it may in fact be the final consideration in the decision whether to launch another round of bond buying, otherwise known as QE3.

So how will today’s jobs number be interpreted by the Federal Reserve? It’s impossible to say for sure, but 93,000 jobs per month does not represent the kind of job growth that will do anything more than keep up with population growth. And while the unemployment rate technically declined from 8.3% to 8.1%, that decline was mostly due to workers dropping out of the labor force. The total number of unemployed persons remained steady at a staggering 12.5 million people, 5 million of whom have been unemployed for 27 weeks or more. With inflation low and unemployment so distressingly high, further stimulus from the Fed could be just around the corner.

At the same time, Bernanke himself laid out the case for restraint in his speech last week. “Non-traditional monetary policies have potential costs that may be less relevant for traditional policies,” he said. “For these reasons, the hurdle for using non-traditional policies should be higher than for traditional policies.” In other words, the magnitude of bond buying the Fed has engaged in is truly unprecedented, and although economic theory may say that further expansion of the Fed’s balance sheet would help bring down unemployment, there are side effects to these policies that are unknown and potentially dangerous.

But at a certain point, those potentially bad side effects will be overshadowed by the very distressing reality we’re living in now. And with fiscal policy hamstrung by a fierce political election, the central bank is the only part of the government that has the capacity to act. The political effects of the job report are unknown at this point, as there will be two more jobs reports between now and ballot day (including one just five days before the November election), but we will find out what the Federal Reserve thinks of all this when it next meets on September 12.

15 comments
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Buy Steroids
Buy Steroids

but how many were really lost over the same period ?

Wiliam Newman
Wiliam Newman

The conventions have come and gone without anyone calling for reductions in record-setting levels of immigration during a time of sustained unemployment. 23 million Americans are jobless and the government gives out an average 75,000 permanent work permits to immigrant workers every month and permits 7 million non-farm jobs to go to illegal aliens. The press doesn't talk about it; the conventions didn't talk about it. It is up to us to shine a light on the policy.

Candicebff
Candicebff

Florence replied I'm surprised that someone able to make $8472 in 1 month on the network. did you look at this(Click on menu Home)

KJak
KJak

96,000 gained is better than 96,000 lost.  Botton line is -  we're still gaining. Small gains are still better than losses. There isn't a magic fairy wand. Its a long slog to recovery. Anyone remember how long the Great Depression lasted? And it really only ended because of a war. Our situation is different because two unpaid wars put us in this situation. At least with Democrats, you know that policies are being enacted to help build up everyone - not just the wealthiest Americans. Trickle down is a proven fallacy. So stop nit picking though all the BS. The real decision to be made on Nov 6th is: Are you going to vote for trickle down economics? That's all it comes down to. 

smooth edward
smooth edward

The Romney campaign will undoubtedly jump on this report, criticizing the the numbers, but they haven’t said a word about what they will do to change course, other than huge deficit-raising tax cuts for those already well off. I’m still waiting.

JamesTee56
JamesTee56

As shown here, nearly 20 percent of America's metro areas have unemployment rates that are in excess of 10 percent:

http://viableopposition.blogsp...

History proves that both political parties will find it nearly impossible to improve the employment situation for these unfortunate areas.

brianleesblog
brianleesblog

The economy added 96,000 jobs in August -- not enough to keep up with Congressional-forced (via immigration) population growth.

The conventions have come and gone without anyone calling for reductions in record-setting levels of immigration during a time of sustained unemployment. 23 million Americans are jobless and the government gives out an average 75,000 permanent work permits to immigrant workers every month and permits 7 million non-farm jobs to go to illegal aliens. The press doesn't talk about it; the conventions didn't talk about it. It is up to us to shine a light on the policy.

"[I]mmigration reduces the wages of domestic workers who compete with immigrants. Thats just supply and demand: were talking about large increases in the number of low-skill workers relative to other inputs into production, so its inevitable that this means a fall in wages." -Nobel-Prize-winning economist Paul Krugman of the New York Times.

Nonaffiliated
Nonaffiliated

Something strange is going on.  Every time new data comes out, they revise the previous months' jobs data downward.  I doubt that the BLS is cooking the books to generate less bad news, so what's going on?  What is it about the current economy that causes the BLS to consistently overestimate employment? 

Christopher Matthews
Christopher Matthews

There have been several upward revisions over the course of the year as well. Last month, for instance, BLS upwardly revised the May and June employment estimates.

josephmateus
josephmateus

Your name in Portuguese is Cristovão Mateus.   Christopher = Cristovão, Matthews = Mateus. My name is Joseph Mateus, therefore I have the same last  name you have: You can call me Joseph Matthews and would still be my correct name even as though I am a porkuguese canadian. I thought you might enjoy knowing this.

Just don't call me late for breakfast.

Johann Rudd
Johann Rudd

Let the end of the Obama nightmare begin.

Jim S.
Jim S.

China approves $157 billion infrastructure spending

Keep in mind, we're still paying off the War Costs Loans, rubber stamped and off the books till the present administration, and in this country still No Sacrifice as to the results of these wars of choice, a decade now added to the previous decades and wars and underfunded VA!!