April 25, 2018
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Jobs data breaks pattern that boosted Obama re-election campaign

By Roger Runningen and John McCormick, Bloomberg News

WASHINGTON — A smaller than expected addition of 120,000 jobs last month broke a pattern that was giving voters a growing sense of security and boosting President Barack Obama as Republican Mitt Romney attacks his economic record.

The Labor Department reported Friday that employers added 120,000 jobs in March, after an increase of 227,000 the previous month. It was the fewest jobs added in five months. Unemployment fell to 8.2 percent, the lowest since January 2009, from 8.3 percent. Today’s data showed unemployed workers left the labor force as Americans worked fewer hours and earned less on average per week.

“It’s certainly disappointing,” said Chris Rupkey, managing director and chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. “The president looked on much firmer ground talking about recovery in the labor market and today it’s a little shakier.”

The president this week delivered the message that the economy was still not strong and won’t be before the November election.

“Whoever he may be, the next president will inherit an economy that is recovering, but not yet recovered from the worst economic calamity since the Great Depression,” he said in a Tuesday address to newspaper editors.

“Too many Americans will still be looking for a job that pays enough to cover their bills or their mortgage,” he said. “Too many citizens will still lack the sort of financial security that started slipping away years before this recession hit.”

A rise in jobs bolsters household spending, which accounts for about 70 percent of the economy, even as those households are threatened by higher gasoline costs. Regular gasoline at the pump, averaged nationwide, rose 0.8 cent on April 4 to $3.936, according to AAA, the biggest U.S. motoring club. Prices have risen 20 percent this year and are 6.8 percent above a year ago.

Still, there are signs the economy is on a trend toward recovery.

The unemployment rate has fallen from 9.1 percent in August. Consumer confidence climbed last week to the highest level in four years as brighter job prospects and an advancing stock market bolstered Americans’ view of the economy.

The Bloomberg Consumer Comfort Index rose to minus 31.4 in the period ended April 1, the best reading since March 2008, from minus 34.7 the prior week. All three of its components, the economy, personal finances and buying plans, advanced.

The Bloomberg consumer sentiment figures also showed some good news for Obama’s re-election bid. Democrats’ confidence rose to minus 25.2, and that of political independents increased to minus 29.1, both the best since 2007.

“Confidence is critical,” Ellen Hughes-Cromwick, chief economist at Ford, said Tuesday on a conference call with analysts. Recent data show “consumers are pointing to the job prospects. Confidence is sort of keying off the job numbers in some sense.”

Consumer-loan delinquencies fell in the fourth quarter as borrowers benefited from improving job and housing markets, the American Bankers Association said Thursday. Total delinquencies in the 11 loan categories surveyed by the Washington trade group fell to 2.49 percent of all accounts, from 2.59 percent in the preceding quarter, the ABA said in its Consumer Credit Delinquency Bulletin. It marked the first time in eight years that all 11 loan categories fell in the same quarter.

Obama’s presidential rivals have criticized Obama’s stewardship of the economy, which has played a leading role in the Republican debates. The Republicans haven’t swerved from the main theme that the unemployment rate remains too high.

The economy has been central to Romney’s presidential campaign, as he criticizes the Obama administration for failing to pull the country out of the recession more quickly.

“He points out that he did not cause the recession, and that’s true,” the Republican front-runner said at an event in Milwaukee on Monday. “But he’s the one we looked to to end the recession and to lead a recovery, and he didn’t.”

Since World War II, no president has won re-election with a jobless rate above 6 percent, with the exception of Ronald Reagan, who faced 7.2 percent unemployment on Election Day in 1984.

“Unemployment, he said he’d keep under 8 percent — itself a very high level, 8 percent — he said he’d keep it under 8 percent if we let him borrow $787 billion, and it has not been under 8 percent since 37 months ago,” Romney said.

The $787 billion refers to the 2009 economic-stimulus package that Republicans say did little to jump-start the economy.

Romney says Obama’s policies have “prolonged the recession, made it deeper and made it harder for us to come out of it. His economic strategy was a bust.”

The labor market is still weak, so there’s still a case to be made, Phillip Swagel, a White House economist during President George W. Bush’s administration, said in an interview before the report.

“There’s a sense that this might be the best we’re going to see,” he said, with the unemployment rate still above 8 percent and an economy growing “maybe about 2.5 percent.”

“That means jobs growth will continue but moderate,” Swagel said. “It’s not enough” to reduce the jobless rate.

Swagel said another downturn in Europe, a surge in oil prices, another debt-ceiling showdown in Washington after the election or some other surprise shock could derail the nation’s slow recovery.

The Congressional Budget Office has predicted 8.9 percent unemployment for the year, while the Federal Reserve has projected between 8.2 percent and 8.5 percent.

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