“Good times are around the corner."
--Attributed to Herbert Hoover
The country added just 69,000 jobs last month. The Washington Post’s Ylan Q. Mui reports the total was less than half the number economists had expected. The government also revised down its estimate of April job growth from 115,000 to only 77,000. At the same time, the unemployment rate ticked up one point to 8.2%. All bad news. Mui writes:
Friday morning’s data suggested something more like deja vu: Job growth is the weakest since [May last year], when the economy fell into a slump that lasted through the summer. Analysts say the country needs to add roughly 130,000 jobs per month for the recovery to maintain its momentum. But to truly make a dent in the unemployment rate, hiring must reach a sustained rate of 250,000 jobs per month. The country has hit that mark only three times over the past year and a half. [emphasis added]Yesterday’s poor jobs report hit the stock market hard. The Dow fell 275 points, dropping into negative territory for 2012. Declines in both the S&P 500 and the NASDAQ were even sharper. Both indexes have fallen enough from their 2012 highs—10%—to have their drops qualify as a “technical correction,” the last stage before “bear market.”
We’ve had three bad job reports in a row. There are only four more reports before the election. I believe that if just one of the final four comes in low—in other words, is under 130,000 new jobs for the month—then because a majority of the last seven reports will have been poor, the total series will seal voter perceptions of a sick economy. Only with four strong job reports in succession will Obama be able to overcome yesterday’s bad taste.
The chart below shows how Obama is doing on his minimum job creation goals. By October’s pre-election jobs report, he is likely to be able to show some job growth for his term, though that growth will barely surpass the total jobs number the day he took office. The unemployment rate, however, may not yet match January 2009's level of 7.8%.