. . . Forces. . .
". . . No matter who ends up occupying the White House in January, many of the forces that have kept unemployment high and jobs growth slow will be beyond his control.
With employment growth stuck at a slower pace than in any recovery in the past half-century, the presidential campaign now turns on which candidate -- President Barack Obama or former Gov. Mitt Romney -- has the better plan to boost employment. The latest jobs data will do little to change the debate.
The economy added just 96,000 new jobs in August, well below the roughly 130,000 economists had been expecting. Gains in the prior two months were revised down by a combined 41,000. Manufacturers cut 15,000 jobs last month, while another 7,000 government jobs were lost. Temporary employment fell by almost 5,000 workers.
The economy added just 96,000 new jobs in August, well below the roughly 130,000 economists had been expecting. Gains in the prior two months were revised down by a combined 41,000. Manufacturers cut 15,000 jobs last month, while another 7,000 government jobs were lost. Temporary employment fell by almost 5,000 workers.
Other recent reports had painted a somewhat brighter picture. Fewer people applied for unemployment benefits last week, and a private survey by payroll processor ADP found that companies created some 200,000 new jobs in August. Another private report showed that service sector companies, such as hotels, retailers, and financial services firms, expanded at a faster rate last month. . .
. . . That uncertainty – and reluctance to hire – will be stoked by a series of other forces holding back the four-year-old recovery:
While subpar economic growth feels like a recession to many Americans, Europeans are coping with the real thing. The economic contraction that began in troubled economies of Greece and Spain is now spreading to Germany, the flywheel of Europe’s economy, the largest in the world. China, along with the developing economies that feed its massive manufacturing machine, is in an economic slowdown that Beijing has so far been unable to reverse.
The budget impasse in the U.S. is due largely to huge, and rising, cost of providing health care and retirement income to an aging population. The dearth of private retirement savings will bring a slowdown in consumer spending as baby boomers continue to tighten their belts. Those trends are irreversible.
With wage growth stagnant, growth in spending remains weak for consumers in every age group. The boom in borrowing during the 2000s helped offset sluggish wage growth. The resulting housing bust destroyed trillions of dollars in household wealth. Though the housing market is beginning to recover, it will take at least a decade for prices to recover to the 2006 peak.
As private employers have slowed the pace of new hires, state and local governments are still shedding workers. The Obama administration’s massive federal stimulus program – now criticized by Republicans for failing to produce the number of jobs originally projected – helped blunt those layoffs. As those funds have dried up, local governments have been hit with lower sales and property tax receipts, cuts in state aid and, in some cases, mandated tax caps.
Even the Federal Reserve – the economic fire brigade of last resort – seems to have run out of tools to fight the fire. Friday's weak jobs report give the central bank more reason for another big money drop known as quantitative easing or QE. But after two rounds of more than $1 trillion in pump-priming, and short-term interest rates already at zero, most economists see diminishing returns from another effort to stimulate growth by pumping more money into the system.
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