Waiting for the big jobs report
August job creation may have been good. But it's not clear any improvement can change voters' minds now.
It’s shaping up to be an interesting ‘big government jobs report’ tomorrow. The timing of the U.S. Labor Department's release of the employment report, a day after President Obama makes his big speech at the Democratic National Convention, guarantees that the numbers will become part of the answer to the question: are we better off -- and is the economy better off -- than four years ago?
Reading the early signals, most expect that the news will be upbeat -- something along the lines of a ‘better than economists expected’ report, even though it might well be worse than July, which was in turn a welcome upturn from the dismal job-creation of the spring.
Economists are predicting between 100,000 and 125,000 new jobs added in August (compared with 163,000 in July). However, several new indicators seem to show the job market is doing better than that. Private payroll company A.D.P. reported 201,000 new private-sector added jobs in August (about 30 percent higher than expected). The Labor Department said that first-time jobless claims fell this week. Companies are keeping their current employees around, and layoff plans are at a 20-month low, according to outplacement firm Challenger, Gray and Christmas. Auto plants stayed open through the summer, housing is improving, cities may have been able to bring back more teachers this fall than originally expected. Federal income-tax withholding is up, indicating that perhaps 200,000 jobs were added in August, according to investment research firm TrimTabs.
Economists keep pointing ominously to ‘headwinds’ and ‘uncertainties’ that the U.S. economy could face in the next few months. Europe’s sovereign debt problems and creeping recession; China’s slowdown; volatile oil prices; the U.S. election and the U.S. ‘fiscal cliff’ of expiring tax cuts and mandatory across-the-board federal budget cuts. But so far, none of these has seemed to bite into slow-but-steady job creation.
Including tomorrow's, we get three more monthly employment reports before the election (the final one comes the Friday before Election Day). And although politicians and pundits will keep issuing sound bites as if there are opportunities to change voters’ impressions of the economy before the election, the reality is that we are already at or near the point at which voters’ impressions of the economy have hardened.
These impressions, says Princeton historian Julian Zelizer, are formed by months and years of negative economic news and anxiety -- including personal experiences of layoffs, long-term unemployment and foreclosure. Not to mention the same for neighbors, friends, family members and co-workers.
Unemployment is unlikely to fall below 8 percent by Election Day -- a key benchmark that could make people feel a bit better. And, in fact, unemployment may rise above the current 8.3 percent in coming months, if more unemployed people start looking for work again, sensing that job-hunting may be more fruitful. That would be a bit of ‘good news’ for job-seekers, though it wouldn’t be particularly welcome to the incumbent trying to keep his job in the White House.