Friday's employment report brought more good news to President Obama in what has already been a solid final week of campaigning for the incumbent.
Earlier this week, Obama was praised by New Jersey’s outspoken—and Republican—Gov. Chris Christie for his handling of the recovery from Hurricane Sandy after it ravaged parts of the East Coast. He also got a surprise endorsement from New York City Mayor Michael Bloomberg. On Friday, the final major piece of economic data released during the campaign showed signs that the economy was moving forward rather than retreating.
Payrolls grew by 171,000 last month, according to the Labor Department, besting economists’ expectations of a 125,000 gain. Unemployment ticked up slightly to 7.9 percent, in line with expectations and likely a reflection of workers reentering the labor force as the prospect of a job appeared to be in closer reach.
The report doesn’t change what we know about the recovery: The economy is moving forward, if slowly. But it still gives Team Obama something to cheer about in the final four-day push of a campaign in which his handling of the economy has been hit hard by his opponent.
“While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression,” White House Council of Economic Advisers Chairman Alan Krueger said in a statement following the report’s release.
Additional signs of strength were apparent beyond the headline numbers: The labor force grew by 578,000, a sign more people feel good enough about the economy to look for work. And payroll growth for August and September was revised upward by a combined 84,000, bringing the four-month average to 173,000. “That still isn't great but, if sustained, it should be enough to bring the unemployment rate gradually lower,” Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a Friday research note.
The report is mixed enough, however, that GOP presidential candidate Mitt Romney doesn’t have to sing a new tune as he makes his closing arguments for the presidency. The labor market continues to show stagnation in important areas, such as manufacturing employment, long-term unemployment, and the length of the average workweek. That—and the slow pace of decline in the unemployment rate, which has fallen just 0.4 percentage points since the beginning of the year—will give Romney something to point to during tonight’s massive “Victory Rally” of Republican leaders in Ohio to kick off the final four days of the former Massachusetts governor’s campaign.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill,” Romney said in a statement after the report’s release. “On Tuesday, America will make a choice between stagnation and prosperity.”
What the mixed report means for the economy will outlast its significance for the presidential campaign. Analysts at Nomura Global Economics, in a research note, referred to the jobs numbers as “a neutral report that shows employment continuing to increase at a slow pace.”
The report suggested that the twin threats of spending cuts and tax hikes, known as the fiscal cliff, scheduled to kick in with the new year may not be weighing on businesses to the degree that surveys of CEOs and third-quarter gross domestic product numbers have suggested in recent months, although it’s unclear why the data don’t match.
“If you look at the [business] investment figures, you know, businesses are running scared. If you look at the employment figures, they’re not. And I’m not sure which is the real story. I guess it’s a mix of both,” Ashworth said in an interview with National Journal.
It also isn’t likely to change what the Federal Reserve is likely to do when its policy-setting committee next convenes in December. The Fed is looking for the labor market to “improve substantially,” or it will increase its level of asset purchases under the current “QE3” program or wield some of its additional policy tools to help bring down the unemployment rate. With a report showing slow but not strong growth, the Fed may keep its level of asset purchases constant in December—although one additional employment report, to be released on Dec. 7, will land before that meeting.