The latest jobs report is bad news for the economy and for the Obama administration. April’s disappointing payroll numbers confirm that the economy is slowing again on the heels of a winter in which the recovery appeared to be finally picking up steam.
If job growth continues at this rate, unemployment will remain at or above the politically important 8 percent level before Election Day, according to Hamilton Place Strategies’ Patrick Sims. Sims calculates that it will take monthly payroll growth of 176,000 to get the rate below 8 percent by November--unless more Americans drop out of the labor force or stop looking for work. That’s what caused the April headline unemployment rate to fall from 8.2 percent to 8.1 percent; labor-force participation is now at its lowest point in 31 years. That’s not the story an incumbent wants to tell.
There is little good news for the Obama administration to point to. The number of long-term unemployed, the plight of which has dogged the White House, remained staggering and largely unchanged at 5.1 million and 41.3 percent of the total unemployed. The economy seems now to be treading water, rather than surging forward.
When the economy looked like it was gaining steam this winter, GOP front-runner Mitt Romney focused his criticism of Obama on the still-elevated unemployment rate. “Of course it is good news fewer Americans are out of work, but thirty-five consecutive months of unemployment above 8 percent is no cause for celebration,” he said after January’s strong report. The softening of the labor market gives Romney a new case against the president. “We seem to be slowing down, not speeding up, and this is not progress,” he said on Friday.
The administration, for its part, is writing a narrative of slow but steady economic improvement, despite bumps like the soft March employment report on the road. The White House points to 25 months of consecutive gains in private-sector payrolls; today, it can say 26 months. And the Treasury Department released its take on the recovery in advance of the April jobs numbers, with pages of graphs showing an economy gradually strengthening in the wake of the recession. Charges that the administration’s regulations, taxes, or the size of government were impeding economic growth in the U.S. are not supported by economic evidence, the Treasury Department said.
To be sure, the payroll-growth numbers for February and March were revised up in April’s report, and historical revisions--upward for the past 22 of 23 months--suggest the same is likely to happen to April. But even Friday's upward revisions didn’t change the base picture: Growth in February was strong at 259,000, and March remained relatively weak at 154,000.
There are many threats to the recovery. European leaders are working to solve their fiscal problems, but a solution is not assured and the United States remains vulnerable to cross-Atlantic fallout if the core euro-zone countries experience a financial crisis. And economists worry that the “fiscal cliff” of tax and spending cuts at the end of 2012, or uncertainty as it approaches, will cause growth to slow.
A strong employment report would have provided the economy, and administration, some insurance against these threats. Unfortunately, it didn’t get that.