Job Weakness Starts to Shape Election Tone

It is increasingly apparent what the economy will look like when President Obama faces voters in November: pretty much what it looks like today. And that picture, a report from the Labor Department made clear on Friday, is far from the booming job growth that prevailed only a few months ago. In June, the economy added a meager 80.000 jobs, and unemployment rate remained at 8.2%. Early this year, optimists buzzed that the jobless rate might touch below 8% by the election, a milestone that would be a major symbolic victory for incumbent. Then employment growth slowed in March and took a turn toward the paltry in April and May. With Friday’s report, what looked like a blip has now become a streak. And with a gridlocked Congress unlikely to pass any additional stimulus measures before election, the president is stuck again with an economy in stall mode. June’s job growth, after a revised increase of 77.000 in May, was just about enough to keep up with population growth, but not nearly enough to reduce the backlog of 13 million unemployed workers. The economists have scaled back their expectations for the rest of the year and are now forecasting continued sluggishness. “This economy has no forward momentum, little help from monetary or fiscal policy,” said K. Bostjancic, director of macroeconomic analysis for Conference Board. “As if that were not enough, ill winds are blowing in from both a contracting Europe and slowing growth in emerging markets.” Friday’s report also put a chill on financial markets, sending stocks sharply lower on both sides of the Atlantic. At a campaign stop in Poland, Ohio, on Friday, Mr. Obama urged voters to take the long view, and to be mindful of the economic state he inherited. “I want to get back to a time when middle-class families and those working to get into the middle class have some basic security,” he said. “We’ve got to deal with what’s been happening over the last decade, the last 15 years.” Mr. Romney, on the other hand, emphasized the more recent string of weak job growth that has taken place under Mr. Obama’s leadership. “This is a time for Americans to choose whether they want more of the same,” Mr. Romney said from Wolfeboro, N.H., where he is vacationing. “It doesn’t have to be this way. America can do much better. And this kick in the gut has to end.” Recent string of weak employment growth may work to political advantage for Romney. From December through February, private companies added an average of 252.000 workers a month. But job growth slowed in March, leading some economists to wonder whether unseasonably warm winter, rather than a fundamentally healthier economy, had been the real source of the short-lived employment surge. “The net of it is not as if the economy is collapsing, but it wasn’t really as strong as it looked in December, January and February,” said Jim O’Sullivan, United States economist at High Frequency Economics. Numbers themselves are also adjusted by season, and these adjustments themselves can be imprecise and open to interpretation (…..)

Link: http://www.nytimes.com/2012/07/07/business/economy/unemployment-report-for-june.html

Acerca de ignaciocovelo
Consultor Internacional

2 Responses to Job Weakness Starts to Shape Election Tone

  1. Professor Uziel Nogueira says: Is the 8.2% unemployment rate a temporary phenomenon or the new normal? one school of thought argues that high unemployment rate is now a permanent fixture of the economy. Globalization and wrong political choices explain this new scenario. The US is no longer the most dynamic market in the world. Politics is a zero sum game between republicans and democrats in which the 1% is always in the losing side. If high unemployment is the new normal in the economy, millions of citizens are on their own. The establishment elite is not prepared to deal with people without jobs for too long. The American Dream ideology is still embedded in the imagination of many political leaders and sold to voters. The question is: How long can the US political system endure a subclass of millions of unemployed Americans? after all, well paid jobs were a natural result of a successful economic model for more than 50 years. Now, reality has changed against American workers. Apple is the new paradigm of US transnational enterprises. It is the most profitable company in the world, producing in China and paying young American sales people $24,000/year. The kids feel proud to work for Apple! Is this the future for young American workers?


    US politicians are not prepared to face an economic system that has ceased to create enough well paid jobs as in the past.

    http://www.nytimes.com/2012/07/07/business/economy/unemployment-report-for-june.html

  2. Wondering why government can’t restart the sluggish economy? Well, one reason is that we are still paying the price for the greatest blunder in domestic policy since World War II. This occurred a half-century ago and helps explain today’s policy paralysis. The history — largely unrecognized — is worth recalling. Until the 1960s, Americans generally believed in low inflation and balanced budgets. President John Kennedy shared the consensus but was persuaded to change his mind. His economic advisers argued that, through deficit spending and modest increases in inflation, government could raise economic growth, lower unemployment and smooth business cycles. None of this proved true; all of it led to grief. Chapter One involved inflation. Increases weren’t modest; by 1980, they approached 14 percent annually. Business cycles weren’t smoothed; from 1969 to 1981, there were four recessions. Unemployment, on average, didn’t fall; the peak monthly rate — reached in the savage 1980-82 slump — was 10.8 percent. Americans lost faith in government and the future, much as now. Confidence revived only after high inflation was quashed in the early 1980s. Now comes Chapter Two: How the retreat from balanced budgets has weakened America’s response to today’s downturn, the worst since the Great Depression. It has limited government’s ability to “stimulate” the economy through higher spending or deeper tax cuts — or, at least, to have a meaningful debate over these proposals. The careless resort to deficits in the past has made them harder to use in the present, when the justification is stronger. The balanced-budget tradition was never completely rigid. During wars and deep economic downturns, budgets were allowed to sink into deficit. But in normal times, balance was the standard. Dueling political traditions led to this result. Thomas Jefferson thought balanced budgets would keep government small; Alexander Hamilton believed that servicing past debts would preserve the nation’s credit — the ability to borrow — when credit was needed (…..)

    http://www.washingtonpost.com/opinions/robert-samuelson-why-us-economic-policy-is-paralyzed/2012/07/08/gJQARBEwWW_story.html?wpisrc=nl_opinions

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