September Jobs Report Another Nail In Bush's Coffin
To his credit, President Bush didn’t play with the September jobs report, as I suspected he might in my post last night. But in looking at the pathetic numbers released from the Labor Department this morning, there is no way to spin 96,000 new jobs in an economy now three years into a recovery. Various experts were predicting upwards of 140,000 new jobs this month, and even that number is paltry and well below what is necessary to bring down unemployment and sustain strong GDP growth. Yet the Bush economy can’t even generate 100,000 new jobs fed with a steady diet of deficit spending and loose money.
Kerry should make Bush’s life miserable tonight on the issue of jobs and our economy. Given the slumping consumer confidence numbers that accompany these job numbers this morning, there should be plenty of folks ready to listen to Kerry’s attack tonight. But take a look at the ridiculous way BC04 is trying to spin these awful numbers:
Bush cast the addition of 96,000 jobs as proof his tax cuts have bolstered the jobs market and the economy overall while Kerry pointed out that the country has lost jobs overall under the Bush administration, a first since the Depression.
On the day the report came out, Bush's campaign unveiled an advertisement for national cable networks that touts "nearly 2 million jobs in just over a year," resulting in "nearly 2 million more people back working," and "nearly 2 million more people with wages."
Bush/Cheney are proud of creating only 2 million jobs in just over a year? Is there something positive about averaging less than 200,000 new jobs a month, jobs that pay less than those lost, and jobs that to a large degree are temporary help jobs?
So how does Elaine Chao spin this? She blames high oil prices and hurricanes, even though her own staff say that the hurricanes had little impact.
But Labor Secretary Elaine Chao, in a statement, said the economy "has been through a great deal lately — devastating hurricanes and rising oil prices." The new figures show "the strength and resilience of our economy and that the labor market continues to improve," she said.
96,000 jobs is a sign of "strength and resilience?"
And the Labor Department reported that it had to revise downward its previous estimate of the number of jobs created in August by 16,000. Plus, most of the jobs created in September were in government or lower-paying service sector jobs, while the economy shed another 18,000 manufacturing jobs in September.
The September job-creation total came in below Wall Street economists' forecasts for 148,000 new jobs. The department also revised down its estimate of August new jobs to 128,000 from 144,000 it reported a month ago.
Most jobs in September came in the services sector, while manufacturers shed 18,000 jobs last month after increased hiring in the two prior months.
Observers are pointing out how anemic these results really are.
"I wouldn't want to be in President Bush's shoes. He had better prepare himself for an onslaught," said private economist Ken Mayland of ClearView Economics, noting Friday night's second presidential debate. "The reality is that a 96,000 increase in a work force of a 131 million base is an anemic rise, and is in no way a satisfactory increase."
The economy should be creating 250,000 jobs or more per month by now, he said. Economists predicted that about 150,000 new jobs would be added in September.
Have fun tonight Mr. Bush. Bring your Depends. You’ll need them.
Update: As a follow up to my earlier post about how pathetic today’s jobs report is, I pass along to you an analysis of these numbers by the Economic Policy Institute.
Over the past four months, payrolls have grown by an average of 101,000 per month, well below the growth rate needed to significantly lower unemployment and absorb the considerable degree of slack remaining in the labor market. Importantly, this recent trend of diminished growth is well below the average payroll gains of 225,000 per month which prevailed in January through May of this year. For the private sector (excluding government), the deceleration is even stronger: only a monthly average of 77,000 jobs gained in June through September compared to 225,000 from January through May.
The BLS report revealed considerable weaknesses throughout the economy. The household survey, from which unemployment is measured, reported a decline of over 200,000 in both employment and the labor force. While this survey is more volatile on a month-to-month basis, it clearly reveals a labor force that is growing half as fast as has usually been the case in recent years (0.5% per year so far this year compared to 1% in prior years). The deceleration is a signal that many potential job seekers are avoiding job searches in such a weak labor environment. Most importantly, since these persons are not counted among the unemployed, it suggests that the 5.4% unemployment rate paints too rosy a picture of the tautness of the job market.
It is also notable in this regard that the share of the population employed—62.3%—remains two percentage points below its pre-recession level, another sign of lagging employment opportunities. Over the past year, the employment rate has crept up only 0.2 percentage points. At this point in previous recoveries, employment rates were increasing more quickly. For example, at this stage in the 1990s recovery, which also began with a jobless phase, employment rates were up 0.8 points over the prior year; the comparable figure for the 1980s recovery was 1.1 percentage points.
The lack of job creation is also evident in the data on long-term unemployment, which show that 21.8% of the unemployed have been jobless for at least half a year, up from 20.7% last month. Since October 2002, more than one-fifth of the unemployed have fallen into this long-term jobless category, a range typically seen during periods of much higher unemployment rates. This represents the longest stretch on record in which at least one-fifth of the unemployed are long-termers.
Employment changes by industry reveal pervasive weakness in hiring. Manufacturing employment, which had recently reversed trend and started growing this year, contracted by 18,000, the sector's worse month since last December. Private-sector service jobs were up by 72,000, but 33,000 of these net new jobs were in temporary help, a continuing sign of employers' cautious hiring practices. Retail trade is now in a three-month slide, down 15,000 last month and 34,000 since June, reflecting tepid growth in retail sales, particularly among large, lower-end retail outlets. Information services has also lost ground over the past three months, shedding 12,000 jobs in September, led by a 9,000 decline in telecom.
Of those sectors adding jobs, the largest was government, adding 37,000, exclusively among state and local governments. Other than a strong month for real estate and rentals—up 15,000—there was little evidence of strong private-sector labor demand.
Today's report confirms that although the jobless recovery is over, the nation has yet to reach a level of employment growth that will absorb the slack remaining in the job market. In fact, September's payroll gains of 96,000 appear to be part of a new, diminished rate of job growth that began a few months ago and stands in contrast to the stronger growth rate earlier in the year. At this point, the main factor keeping unemployment from rising is the number of people withdrawing from or not entering the labor force.
And EPI’s Job Watch notes that the percent of the population employed is still well below pre-recessionary levels and the monthly job creation figures are way below what Bush claimed would be generated by the passage of his tax cuts.
A second benchmark for evaluating job growth performance would be the number of jobs needed to steadily reduce the current prevailing unemployment and underemployment. Reducing labor slack is necessary to reverse the family income declines of the last few years and to generate wage growth that outpaces inflation. A new study by the Cleveland Federal Reserve Board highlights the decline in the employment-to-population ratio as a useful indicator of the growth in labor slack. Given the employment-to-population ratio in September 2004 (62.3%), restoring this ratio to its 2001 pre-recession level (64.3%) would require payroll job growth of 275,000 to 290,000 per month.
A third benchmark for judging the rate of job growth would be the employment growth projected by the President's Council of Economic Advisers (CEA) in their annual report issued in February 2004, which projected 300,000 new jobs added per month. The chair of the CEA, Greg Mankiw, referred to this projection as being "about average for a recovery." This benchmark, used monthly by JobWatch.org, is the number of jobs (306,000 per month) that the Bush Administration projected would be created from June 2003 to December 2004 if its proposed tax cuts were legislated in 2003. The CEA projections may seem high relative to the actual performance of the last 42 months, but they reflect the normal pace of job creation in an average labor market recovery.
This paints a picture of gross failure three years into a “recovery.”