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Hiring Slowdown Dampens Economic Optimism

The jobs picture–and thus the overall economic forecast–becomes much gloomier with the release of the March Labor report.

CNN Money (“March jobs report: Hiring slows, Unemployment falls“):

Hiring slowed dramatically in March, clouding optimism about the strength of the recovery. Employers added 120,000 jobs in the month, the Labor Department reported Friday, matching economists’ expectations.

The number marked a significant slowdown in hiring from February, when the economy added 240,000 jobs. ”It’s discouraging that job growth was half of what it had been the previous month,” said Christine Owens, executive director of the National Employment Law Project.

Meanwhile, the unemployment rate fell to 8.2% as the labor force shrank by 164,000 workers, mostly due to white women leaving the job market.

The hardest hit industry was retail, which lost 33,800 jobs, mostly at department stores.

On the positive side, manufacturers created 37,000 jobs, professional services created 31,000 jobs, and health care added 26,000 jobs. Restaurants and bars were also a large job creator, hiring 36,900.

One small bit of good news: public sector job losses continued to slow. The government has been bleeding jobs since the middle of 2010, but recently those layoffs have started to wind down. The government cut just 1,000 jobs in March, while private businesses — which have steadily been hiring for two years straight — added 121,000 jobs.

Overall, the job market is still not out of the deep hole left by the financial crisis. Of the 8.8 million jobs lost, about 3.6 million have been added back. About 12.7 million Americans remain unemployed, and 42.5% of them have been so for six months or more.

Naturally, this dip comes with speculation about the political impact on President Obama.  Kevin Chupta, writing for Yahoo! Finance (“Does Weak March Jobs Report Doom Obama Re-Election Bid?“):

Politicians on both sides of the aisle will pounce on these numbers with the Presidential election just seven months away. The question still remains: Just how much will it impact votes in November?

“I don’t think there is a magic formula or a specific unemployment number that can guarantee the President’s loss or victory in November,” says Nathan Gonzales, deputy editor of the Rothenberg Political Report and founder of PoliticsInStereo.com.

Gonzales says it’s more about the perception of the economy and not the actual data. If Americans believe the country is headed in the right direction, they will be less apt to change the leadership. This reality frustrates the White House he says, because voters could be susceptible to a sentiment that may or may not match the numbers.

Jobs reports like the ones released today are important, but it’s more about the broader trend leading up to the election.

“If (the economy) starts to go down, there’s more of a hiccup or a stalling…then that just plays right into the Republican hands being able to say ‘look it’s time for a change, the President’s policies aren’t working.’”

If jobs numbers are the more cerebral data point, gas prices are the in your face indicator for the average American.

“If gas prices are high I think that leads to a little bit of sense the country’s not headed in the right direction,” says Gonzales, “and that would fall on the shoulders of the incumbent president and people may be looking for a change once again.”

As I’ve noted many times over the years, blaming the president for either gas prices or the private hiring decisions of businesses operating in a complex global economy is irrational. It is, nonetheless, the norm.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. Hey Norm says:

    “…becomes much gloomier…”

    Maybe. Until you realize that for the eight years of Bush43 private employment shrank by 673,000 jobs, federal employment grew by 50,000 jobs, and government employment grew by 1,753,000 jobs. So if shrinking Government is your “thing” then you should be happy. 120K private sector jobs and no public sector jobs. Unless of course, because it’s a Democrat doing the shrinking, your ideology won’t allow you to be happy about anything positive that happens to the economy.
    Yeah….120,000 private sector jobs ain’t nuthin’ to write home about. But relatively speaking…it’s a lot better than it was.

    Like or Dislike: Thumb up 6 Thumb down 0

  2. Brummagem Joe says:

    Why do you think I said this yesterday JJ?

    .The March employment numbers are out tomorrow but we’ve had three previous months with average job growth of 250,000 a month and as they say the trend is your friend even if there is a minor downtick.

    I expected them to to be off a bit but remember the trend is your friend. Now if we have three months at 120k then there is slowing. The retail number is a bit odd given the sales numbers coming out of the sector and yes it looks like the big state bloodletting is coming to an end.

    Like or Dislike: Thumb up 2 Thumb down 0

  3. Again, I go to Calculated RIsk for charts which show the long term trends. In particular, look at this one.

    That is a noisy data series, and you’ll note many month-to-month down-ticks since 1qtr 2010, which did NOT signal a flip to the negative. Neither did they signal a double-dip.

    (I believe I was worried about dips myself back in 2009, when we were making that slog to positive numbers. Now, less so.)

    But again, there is a constant stream of opinion by people who have not read Fooled by Randomness, directed at people who have not read Fooled by Randomness. Human nature abhors uncertainty, even when uncertainty is the prudent answer.

    Like or Dislike: Thumb up 0 Thumb down 0

  4. Oops, Calculated risk has a little front end mojo on their chart links. Try this one for “change in payroll jobs per month (ex census)”

    Like or Dislike: Thumb up 0 Thumb down 0

  5. Hey Norm says:

    What is an interesting trend shows up in this chart that JP linked to.
    http://www.calculatedriskblog.com/2012/04/march-employment-report-120000-jobs-82.html
    The Recovery from the ’08 Bush Contraction is near parallel to the recovery from the ’01 Bush Recession which is nearly parallel to the ’90 Bush 41 recession.
    I’m not sure why that is…are we structurally incapable of recovering from economic jolts quickly any more? And why? But in any case it makes highly dubious Romney’s claim that he could make the economy recover much faster than Obama has…even if you actually believe the President has real abilities in this regard.

    Like or Dislike: Thumb up 0 Thumb down 0

  6. @Hey Norm:

    I’m not sure why that is…are we structurally incapable of recovering from economic jolts quickly any more? And why?

    This is set against, as we’ve noted before, strong corporate profits. It shows (US) worker productivity as a double-edged sword. From there we can speculate on automation and globalization, but I don’t think any economist has found a way to decompose the signal.

    Of course there is this:

    Analysts now see 3.2% Q1 profit growth from S&P 500 firms, according to Thomson Reuters data. That’s down from 5.5% on Jan. 1 and hopes for 12.8% six months before that. Exclude Apple (AAPL), and profit may rise just 1.8%.

    Apple would seem to be the innovation, automation, and globalization story in a nutshell. SP500 earnings up 3.2%, but half of that, 1.4%, is just Apple.

    Some more long-term charts for corporate profits are here.

    Like or Dislike: Thumb up 0 Thumb down 0

  7. Here is an interesting tidbit, which at once calls BS on the the GOP “downturn meme” and highlights deeper structural problems:

    One month of data can be very noisy, but I think that if you look at March 2011 compared to March 2012 you can clearly see the End of Retail.

    According to the BLS, about 2 million more people were working last month than were working a year ago. But we have 10,000 fewer people working in general merchandise stores. We have 20,000 fewer people working in electronics and appliance stores. We have 17,000 fewer people working in “sporting goods, hobby, book, and music stores.”

    Put down the meme pipe, James, and step away ;-)

    Like or Dislike: Thumb up 0 Thumb down 0

  8. (Perhaps I should have said “structural changes” rather than “problems.” That we order on-line (I’m waiting for a tenkara rig!) is our group decision. In theory, if everyone finds a niche in a web-vending environment (as did my tenkara buddies, small shops all) then it might ultimately be ok.)

    Like or Dislike: Thumb up 0 Thumb down 0

  9. Hey Norm says:

    @ JP…
    You beat me to that retail issue.
    But the Government employment level is a much bigger…and largly ignored issue.
    We have eliminated well over 1M public sector jobs. If that’s not a structural problem then I don’t know what structural issue means. That’s 1 million fewer teachers, firemen, police, and dpw workers creating demand. Are they ever coming back? Not under austerity budgeting. We currently spend about 12% of GDP on discretionary budget items. Romney/Ryan would slash that to between 3-4%. What does that do to the situation?
    During the Bush43 years government employment grew by more than 2M.

    Like or Dislike: Thumb up 1 Thumb down 0

  10. Hey Norm says:

    Republicans are fond of saying that Government can’t create jobs.
    This is mind-boggling…if not for government jobs Bush43 would have only created 673,000 total jobs in 8 years. That’s 7,010 private sector jobs a month.
    120,000 private sector jobs this month is damn good by comparison.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. Ben Wolf says:

    @john personna: There’s no good reason to expect a recessionary slide. I did say a couple of months ago that I expected a slowdown heading into the second quarter, a combination of high fuel prices sapping consumer spending and lower budget deficits reducing incomes and corporate profits. If both short-term trends continue then growth will likely slow to 1.5% or less without tipping into negative territory. It will damned well feel like a recession, though.

    Like or Dislike: Thumb up 0 Thumb down 0

  12. @Ben Wolf:

    Have you actually read Fooled by Randomness?

    Your closing line is a little too confident for anyone who has.

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  13. Ben Wolf says:

    @john personna: It feels like a recession now for the millions who still can’t find work and the businesses not seeing an increase in spending. A slowdown will just spread the sense of misery.

    Like or Dislike: Thumb up 0 Thumb down 0

  14. @Ben Wolf:

    ;-), I think that we can talk about “now” with fair confidence.

    What I was really speaking to though, was that many people have a naive belief that the best investors or analysts must know the future. In fact they don’t. They are fickle. They may say on Monday that there is a looming slowdown, change positions on Tuesday, and by Wednesday be talking about strength in the economy.

    If you aren’t used to that, you may (like James above) just link to some random prediction and think it’s important.

    Like or Dislike: Thumb up 0 Thumb down 0

  15. Ben Wolf says:

    @john personna: I completely agree.

    Like or Dislike: Thumb up 0 Thumb down 0

  16. Hey Norm says:

    Here’s a much clearer illustration of what I was talking about above…we are killing ourselves with public sector job losses.
    http://dailydish.typepad.com/.a/6a00d83451c45669e2016764aed192970b-pi
    Notice in the previous recessions (Reagan, Bush41, Bush43 ’01) that government job growth was way to the positive…not negative as it is now in the recovery from this (Bush43 ’07) recession.
    Just last week Republicans barely managed to approve Highway funding to States. Previously they have fought every single effort to provide aid to States that would keep Teachers and Cops working. Keep that in mind when you hear Boehner and Cantor and Ryan and Romney and the rest talking about a slow recovery.

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Ben Wolf says:

    @Hey Norm: Some people just aren’t bright enough to understand income is equal to spending, and that when spending drops economic activity declines. Those same fools then demand we reduce spending even further on the faith-based notion that this will create “confidence” in Market Jesus, who will then deliver us from socialism with money mana from heaven.

    The whole of neo-liberal/conservative economic dogma reads like the Fall of Man and his attempt to get back to the limited government Garden of Eden.

    Like or Dislike: Thumb up 0 Thumb down 0

  18. Hey Norm says:

    Limited Government of the Garden of Eden…I like that…appropriate for Good Friday I suppose.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Hooray says:

    Terrfic news. Obama’s lies won’t get him re- elected after all!

    Like or Dislike: Thumb up 1 Thumb down 0

  20. Ben Wolf says:

    @Hooray: What?

    Like or Dislike: Thumb up 0 Thumb down 2

  21. Hey Norm says:

    Perry’s so-called “Texas Miracle” has been fueled largley by Government growth as well.

    Like or Dislike: Thumb up 0 Thumb down 1

  22. anjin-san says:

    Perry’s so-called “Texas Miracle” has been fueled largley by Government growth as well.

    Well, that and the fact that a heavily regulated banking industry saved them from many of the consequences of the real estate boom.

    Like or Dislike: Thumb up 0 Thumb down 0