When economists are expecting 100,000 or so net new jobs, and the Labor Department reports measly gains of just 18,000 (plus an increase in the unemployment rate to 9.2 percent), the reaction sounds like this:
– “All in all, an employment report with no redeeming features whatsoever – employment, unemployment, hours and wages all disappointed.”- Barclays
– ”The June jobs report was a shocker. It was far worse than expected, and weak on all key dimensions – job creation, unemployment, the length of the workweek, and hourly earnings. The recent pattern of jobs suggests that the economy hit a brick wall in May.” — IHS Global
– “Overall the June Employment Report was quite disappointing, with basically no positive offsets to the poor headline results.” — Goldman Sachs
– ”The June employment report was universally weak and undoes the modest improvement in the economic data we have seen over the last two weeks. We are back where we started; the risk of a cold summer, similar to last year, is palpable.” — BofA Merrill Lynch
– ”It is hard to excuse this report on supply-chain disruptions and it suggests that growth momentum evaporated as the second quarter drew to a close.”- RDQ Economics
– ”Unfortunately, leading labor market indicators like temporary help employment, aggregate hours worked and first-time jobless claims remain weak and thus do not suggest an imminent reacceleration in the labor market.” — MKM Partners
Indeed, if the labor force, which shrank again, was as big as it was when President Obama took office, the unemployment rate would be north of 11 percent. As it is, the broader U-6 measure surged to 16.2 percent from 15.8 percent. But with an economy growing at just 2 percent or so, expectations should be low. If the economy picks up in the second half, so should job growth.
But we have a long way to go before getting the unemployment even back to 8 percent or so by Election Day 2012, needing some 255,00 jobs a month. Obama’s political team seems to think the unemployment rate does not matter. We shall see. At his new conference today, Obama offered plenty of excuses, including blaming uncertainty over the debt ceiling:
We’ve always known that we’d have ups and downs on our way back from this recession. And over the past few months, the economy has experienced some tough headwinds — from natural disasters, to spikes in gas prices, to state and local budget cuts that have cost tens of thousands of cops and firefighters and teachers their jobs. The problems in Greece and in Europe, along with uncertainty over whether the debt limit here in the United States will be raised, have also made businesses hesitant to invest more aggressively. The economic challenges that we face weren’t created overnight, and they’re not going to be solved overnight.
Hardly the stuff for a soul-stirring campaign ad. A few other observations:
1) Will Obama now make a renewed push for a payroll tax cut extension to be part of the debt ceiling negotiations?
2) Will Tim Geithner leave sooner rather later to be replaced by someone with a job-creation background like GE’s Immelt or Facebook’s Sandberg?
3) Will Rs dig in even further against raising taxes?
4) Will Obama’s approval numbers fall below the plateau they’ve sort of been stuck on (not counting the OBL bounce.)
5) Will the weak economy nudge another GOPer to get into the 2012?
We have to be aware of how the political system functions in the USA. The electorate wil always vote for their pocketbooks. Sensing this, the Politician (Democrat or Republican) will cater to whatever group he can count on for votes. Note the rise of the Medicare/Medicaid/Obamacare, Social Security, Unions, etc. groups as many-voter blocks of votes that are fully dependent on the Politician. The votes will go to the Politician who paints a rosy picture of his plans, promises everything, but at absolutely no or little cost to the voter. So, when the Politician gets into power, he will first look out for ‘Numero Uno’, aka himself. After that, he has to pay the electorate for the votes. Note that paying for the votes costs the Politicians very little, since after all, he is spending other people’s money — a little bit to this group, and that group. It is very easy if there is money in the till. But if there is no money in the bank, bonds can be sold to raise funds for the cause – theu call this deficit spending. Since the bill for the bonds comes much later, everyone is happy, since no one in the present has to pay anything – until the bonds come due, falling on the future generations down the line. Note that this game can keep doing this for a very long time. Unfortunately the bonds are due, with interest. So this present dance ritual of the Politicians posturing over the debt ceiling is merely a show to please their respective Electorate — after all, they aren’t looking out for the interests of the Electorate, and themselves at the same time.
The debt ceiling will definitely be raised. Not to do so would mean the end of the game for both parties — the Democrats now (sorry Unions etc, no can do), and the Republicans later. Both parties have a vested interest in doing so. Imagine them not being to ‘kick the bill down to the next generations?’. Isn’t this the Best Government that our money can buy? If not, we then have to select some other Politician who can promise us even more benefits for our vote! And this is the promise of America.