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.