Job growth fell from July to August. According to the Labor Department, US employers added 96,000 jobs last month. Those numbers are not strong enough to keep pace with population growth. Despite the weak numbers, the unemployment rate fell from 8.3% to 8.1% due to over 300,000 people leaving the workforce. These numbers should be enough to spur the Federal Reserve into action when it meets next week.
The economic data is a mixed bag for President Obama. On the one hand, the number of jobs created is not good enough. The president needs six figures in job growth from now to the election. Coming off a strong convention, these numbers will probably lower the bounce the president gets. Prior to the jobs data being released, his approval rating was surging in the Gallup poll, up to 49% from a low of 43% last week.
The unemployment rate dropping to 8.1% is good news, though. Even though it was mostly powered by people leaving the workforce, the number is still psychologically and politically important. If the number falls below 8% before the election, it will create a powerful talking point for the president. The unemployment rate has been above 8% for the longest stretch since the Great Depression. Dropping below that threshold is going to be significant.
Republican Presidential nominee Mitt Romney was quick to pounce on the jobs data. He claimed that if last night was the party, today was the hangover. VP candidate Paul Ryan stated that this was not what a recovery looked like. The Republicans were eagerly awaiting this jobs report, hoping to pounce on bad numbers. The anticipation could be viewed in plain sight on Fox News, which pumped up the coming of the jobs report as important as the convention itself.
Ultimately, the data tells us what we already know, and that is that the recovery is still weak over three years after it began. There are a number of factors leading to this, but none as important as the erosion of the manufacturing sector of the US. The loss of “low skilled” decent paying jobs has crippled this country, and the service sectors jobs that replaced those in the manufacturing sector has failed to keep demand high enough to rev the economy. In a consumer driven economy, demand is king. Until we get enough money into people’s hands to drive that demand, or finance it with debt as was done in the last decade, then the economy will remain weak.