A Modest Economy Seems To Be Keeping Lid On HiringMay 4th, 2012 11:08 am Associated Press
WASHINGTON (AP) — U.S. job growth slumped in April for a second straight month. It pointed to a steadily growing but still sluggish economy that could tighten the presidential race.
A drop in the unemployment rate wasn’t a necessarily a healthy sign for the job market. The rate fell from 8.2 percent in March to 8.1 percent in April. But that was mainly because more people gave up looking for work.
People who aren’t looking for jobs aren’t counted as unemployed.
The 115,000 jobs added in April were fewer than the 154,000 jobs created in March, a number the government revised up from its first report a month ago of 120,000. It also marked a sharp decline from December through February, when the economy averaged 252,000 jobs per month.
The percentage of adults working or looking for work has fallen to its lowest level in more than 30 years. Many have become discouraged about their prospects.
Here’s what The Associated Press’ reporters are finding:
TEPID ECONOMY, TEPID HIRING
Over time, strong economic growth is vital for strong job growth.
But early this year, hiring accelerated much faster than economic growth did. Job gains averaged a strong 229,000 in the first three months. But the economy grew at a sluggish annual rate of 2.2 percent.
Economists began to wonder: Would growth catch up with hiring? Or would hiring slow to match economic growth (as measured by gross domestic product, or GDP)?
Some economists say April’s disappointing job growth suggests an answer, and it’s not a cheerful one:
“It now appears that jobs have decelerated into line with GDP, rather than GDP accelerating to catch up with jobs,” said Nigel Gault, an economist at IHS Global Insight.
The job market seems to look better with hindsight.
The Labor Department has revised job growth upward for 10 straight months — and for 18 of the past 21. Over the past 10 months, it’s added 413,000 jobs to the original estimates.
The job figures are revised twice. They’re updated in the two months after they first come out. And they’re revised again in an annual update meant to capture updated employment data from the states.
History shows that the updated totals typically follow the trend in job creation: When the economy is creating jobs consistently, the revisions tend to be positive. Months of job losses typically lead to negative revisions.
THE POLITICAL DEBATE
A falling unemployment rate would seem to be good news for President Barack Obama’s re-election hopes. Dating to 1956, no incumbent president has lost when unemployment fell in the two years leading to an election.
On Election Day, unemployment will almost surely be less than it was two years earlier: 9.8 percent in November 2010.
But for the past two months, the rate has fallen for the wrong reason: More than 500,000 Americans have stopped looking for jobs and are no longer counted as unemployed. Job growth averaged a healthy 252,000 from December through February. It slowed to 135,000 in March and April.
The question is whether voters will focus more on the falling unemployment rate (good for Obama) or the modest job growth (not so good).