Horrible Jobs Report

"America is in a slump, with 9% of the workforce unemployed, another 7% underemployed and the economy growing at a tepid 1.8%."

--Pat Buchanan

“The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers.”

--David Plouffe, senior political adviser to the president

Reuters reported nonfarm payrolls rose only 18,000 in June, the weakest reading since last September and below even the most pessimistic forecast in its poll of economists. And the separately-calculated unemployment rate climed to a six-month high of 9.2%. Adding to the weak report, the economy created 44,000 fewer jobs in April and May than previously thought. Two years after the recession ended, employment is still nearly 7 million jobs below its January 2008 peak.

Reuters noted that the average workweek length fell from 34.4 hours to 34.3 hours, and temporary hiring fell for a third straight month. Increases in both are leading indicators of future hiring, so the picture going forward looks bleak as well.

While David Plouffe may downrplay the importance of these basic numbers (see quote and picture above), we see jobs and the unemployment rate as key matrices of Obama’s re-election prospects (see chart below). According to economist Matt McDonald, Obama will have to create 255,000 jobs a month until election to get unemployment below 8%.