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UPDATE: It was already clear that the economy was going to take center stage for the presidential campaign. Now, after Friday’s report showed the country had created only 80,000 jobs in June, fears are growing that Europe’s debt crisis is causing a long slump in the U.S. economy, points out Reuters.
Although the economic recovery seemed to be gathering momentum earlier this year, three months of bad numbers set the tone for the presidential campaign Friday as the chances that the unemployment rate will drop below the psychologically important milestone of 8 percent are diminishing, notes Bloomberg.
Campaigning in Ohio, President Obama asked voters to look beyond monthly figures and think back at how the economy was when he came to office, points out the New York Times.
“We’ve got to deal with what’s been happening over the last decade, the last 15 years,” he said. But Obama also acknowledged the reality that many know all too well: “It’s still tough out there.”
As much as Obama’s campaign may be eager to play down the Labor Department figures, it is becoming more difficult for the president to say that his policy prescriptions are working, points out the Washington Post’s Dan Balz.
Mitt Romney was quick to criticize the president for not doing enough: “This kick in the gut has got to end.”
Romney supporters wasted no time in helping him make his point. Crossroads GPS, the independent group co-founded by Karl Rove, released an ad attacking the president for only offering “slogans and excuses” in response to the weak economy. The sister organization of a GOP-backing super PAC called American Crossroads will spend $25 million to air the ad on network TV in several swing states.
Contrary to what many might think, the problem doesn’t seem to be demand, but rather confidence. Bloomberg points out that the increase in the average workweek by six minutes, plus the increase in temporary staffing show that sales aren’t the issue, but rather that businesses lack the confidence to permanently expand payrolls.
Friday, July 7 at 8:47 a.m.: All the optimistic projections yesterday were for naught. It’s depressing numbers once again for the U.S. economy as employers added a measly 80,000 jobs in June, marking the third straight month of weak hiring, reports the Associated Press. The unemployment rate stays unchanged at 8.2 percent.
The number was lower than forecasts, with the median estimate in a Bloomberg News survey projecting a gain of 100,000 jobs. But it was still a bit higher than the revised May figure of 77,000 jobs, reports Reuters, noting that 1,000 fewer jobs were created during April and May than previously estimated.
The economy added an average of only 75,000 jobs a month in the quarter ending in June, quite the plunge from the 226,000 a month created in the first quarter. Needless to say, these numbers are bad news for President Obama as the election approaches, and the solidification of this trend could do wonders for Mitt Romney’s efforts to gain momentum in the campaign.
Thursday, July 6: While the countdown begins for the much-awaited jobs report Friday morning, several bits of data came out Thursday that seem to hint the June data may not be as bad as some fear. Most important of all is that U.S. companies hired more workers than expected last month, adding 176,000 jobs, according to the ADP National Employment report. That exceeds even the most optimistic estimates, notes Bloomberg. Yet Reuters warns the number should be taken with a grain of salt, pointing out that ADP “has a poor track record of predicting nonfarm payrolls.”
Particularly significant in the private employment report is that constribution and manufacturing appear to have reversed recent declines. That could support the view of many economists who believe a warmer-than-average winter led to more activity earlier in the year, which in turn caused smaller-than-usual gains in the spring, explains USA Today.
In another bit of positive news, the Labor Department said first-time applications for unemployment benefits saw the largest drop in two months, declining 14,000 to 374,000 last week. And yet another report showed the number of planned layoffs fell to the lowest level in more than a year, reports Reuters.
These positive signs led some economists to upwardly revise their estimates. Goldman Sachs, for example, said it was now expecting the economy to have added 125,000 jobs in June, when its previous estimate was 75,000, reports the Financial Times.