Today is the first Friday of a new month (i.e., Christmas for wonks and political junkies), which means the Bureau of Labor Statistics (BLS) has released its monthly report on employment. The economy created 163,000 net jobs in July, an increase over projections—which hovered around 100,000—and a substantial increase over June, when the economy added a scant 80,000 jobs. The unemployment rate remains unchanged at 8.25 percent (up from 8.21), but was rounded up to 8.3 percent for the purposes of the report. This isn’t a good number—a more rapid recovery would require up to 300,000 jobs a month—but it is a sign that the United States is not about to fall into another recession.
Beyond the topline number, here are a few key things to take away from this month’s report.
The revisions were … meh: The BLS revises its job statistics as it gets more accurate information. Today, job growth for May was revised from 77,000 to 87,000, but job growth for June—the most abysmal month of the year—was revised down from 80,000 to 64,000. That number could go back up, but regardless, it’s a sign that that the economy slowed considerably at the beginning of the summer.
The household survey wasn’t great: The jobs report consists of two things—the establishment survey, which collects its information from a sample of non-agricultural businesses, and the household survey, which samples 60,000 eligible households to provide a picture of the employment situation. The downside of the household survey is that it is more imprecise. The upside is that it captures everyone in the economy, from the self-employed and unpaid family workers, to agricultural and private household workers. If you take the household survey—where employment declined by 195,000—and adjust it to reflect the establishment survey, then the economy created 108,000 jobs in July. As always, this is subject to revision. The actual number could go up or down.
Public payrolls are still declining: The public sector is a significant drag on the economy, but not in the way conservatives might think. The economy actually grew by 172,000 jobs in July, but this was offset by the 9,000 jobs shed by states and localities. Overall, the public sector has lost 648,000 jobs since Obama entered office. If those had been saved—by stimulus and aid to states—then the unemployment rate would be near 7 percent, due to the domino effect of jobs begeting jobs (teachers need supply stores, which need workers, etc.) The American Jobs Act would alleviate some of this by providing billions in new funds to states. But this has been rejected by congressional Republicans. By contrast, the plans passed by GOP lawmakers, and adopted by Mitt Romney, would slash public employment and add a heavier weight to further economic growth.
There is genuine good news: It’s not all doom and gloom. Joblessness fell from 14.4 percent to 14.1 percent for African Americans, and from 11 percent to 10.3 percent for Latinos. Wages also went up slightly, by 2 cents, and the duration of unemployment fell from 19.8 weeks to 16.7.
As for the politics? Don’t expect anything to change. Because of the higher unemployment rate, Republicans will continue to attack Obama for his stewardship of the economy. But the greater number of jobs will allow Democrats to make an argument about the relative strength of the economy, compared to the Bush years: from 2001 to 2008, the economy saw net private sector job losses of 646,000. By contrast, under Obama’s tenure, the economy has seen net gains of 332,000.
Not that this will matter for voters; typically, impressions about the economy are set in stone by the end of the summer. Barring dramatic change, voters will evaluate Obama on the basis of the economy as it stands now.
One last thing. Earlier this week, the Federal Reserve said it would not act to stimulate the economy. This jobs report underscores the extent to which that is a mistake. Both inflation and unemployment are at non-optimal levels, as defined by the Fed. An open-ended promise to print money—and thus a higher inflation target—would push businesses to hire and individuals to spend. It wouldn’t fix our problems, but it would raise the ceiling on economic growth, which is being held down by the Fed’s monomaniacal focus on price stability.
The Fed’s refusal to act will condemn millions to needless immiseration. Unless they’re content with mass suffering, now is the time to do something.
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