This was not the employment report either the American worker or the Obama campaign wanted to see right now. The Labor Department said the U.S. economy created just 80,000 jobs in June, less than the 90,000 economists had been forecasting. And private-sector job growth was just 84,000, down sharply from 105,000 in May. Not doing fine.
The unemployment rate stayed at a lofty 8.2%.
As a research note from RDQ economics put it: “The good news is that employment growth is not slowing further but there is no sign of it picking up either. At this pace, job creation is not fast enough to lower the unemployment rate with the labor force growing at close to 150,000 per month on average.” Shorter: Stagnation Nation
This continues to be the longest streak — 41 months — of unemployment of 8% or higher since the Great Depression. And recall that back in 2009, Team Obama predicted that if Congress passed its $800 billion stimulus plan, the unemployment rate would be around 5.6% today.
Just 75,000 jobs were created, on average, per month in the second quarter vs. 226,000 in the first quarter. And for the year, monthly job creation has averaged just 150,000 vs. 153,000 last year. Both numbers are extremely weak.
But those top-line numbers actually overstate the health of the labor market.
– If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. Even if you take into account that the LFP should be declining as America ages, the unemployment rate would be 10.5%.
– The broader U-6 unemployment rate, which includes “all persons marginally attached to the labor force, plus total employed part time for economic reasons,” is 14.9%, up a bit from May.
– The average duration of unemployment ticked up to 39.9 weeks.
– It will take 219,000 net new jobs a month for unemployment rate to be below 8% on Election Day if current participation rate holds steady.
– Job growth during the three-year Obama recovery has averaged just 75,000 a month for a total of 2.7 million. During the first three years of the Reagan Recovery, job growth averaged 273,000 a month for a total of 9.8 million. If you adjust for the larger U.S. population today, the Reagan Recovery averaged 360,000 jobs a month for a three-year total of 13 million jobs.
– The U.S. work force remains shrunken with just 58.6% employed:
None of this should be surprising. The economy grew a bit less than 2% last year, and we averaged about 150,000 new jobs a month. We are growing a bit less than 2% this year, and job growth is averaging about 150,000 jobs a month. And there are few signs the rest of the year will be any better. And given a) how the eurocrisis is AGAIN flaring up, and b) China continues to slow, it sure seems like 2% growth and 8% unemployment is a best-case scenario with plenty of downside risk — for the economy and the Obama campaign.
James Pethokoukis is a columnist and blogger at the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.
Pethokoukis was the business editor and economics columnist for U.S. News & World Report from 1997 to 2008. He has written for many publications, including The New York Times, The Weekly Standard, Commentary, National Review, The Washington Examiner, USA Today and Investor’s Business Daily.
Pethokoukis is an official CNBC contributor. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, The McLaughlin Group, CNN and Nightly Business Report on PBS. A graduate of Northwestern University and the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! Champion.