'Bombshell' jobs report puts economic growth back in US election spotlight

Report announcing that only 38,000 jobs were added in May sent Republicans on a tear in a way that hasn’t been seen since the 2012 election cycle

Back in 2012, the first Friday of the month was an exciting day in US politics. As Barack Obama and Mitt Romney fought to convince voters that they’d be the best candidate to steer the US economy through recovery, the official monthly jobs report provided both sides with ammunition.

Four years later, with the economy adding on average 200,000 jobs a month and the unemployment rate at 5%, down from 10% when Obama took office, those Fridays have come and gone without much to-do from those vying to be the next president.

That is, until this week.

A disappointing report announcing that the US economy had added just 38,000 jobs in May put the monthly statistic back into the US election spotlight just as Obama has spent the past few weeks trying to defend his economic legacy.

“Terrible jobs report just reported. Only 38,000 jobs added. Bombshell!” tweeted Donald Trump, the Republican candidate for president.

“Devastating jobs report showing weakest hiring in five years is a sign we need to move away from failed Obama policies [that] Clinton is promising to keep,” tweeted Reince Priebus, chairman of the Republican National Committee.

The Republicans also seized on the fact that the unemployment rate had dipped because 458,000 people left the labor force or gave up looking for work.

This is unacceptable and NOT "progress." pic.twitter.com/urz1Y6f4eJ

— GOP (@GOP) June 3, 2016

Democrats are having none of it. “When I hear Republicans complaining about the lower labor force participation rate … it’s one thing to complain, it’s another thing to do something about it. The most important thing to increase labor force participation is to pass federal paid leave because it would enable us to get more women in the workplace,” the US labor secretary, Tom Perez, told the Guardian.

The Obama administration was quick to point out that this is just one bad report. One bad report does not a recession make. Furthermore, they argued, overall the US economy continued to add jobs.

“We don’t get excited when the job numbers are better than expected and we don’t get too disappointed when one month’s job numbers are lower than expected,” the White House press secretary, Josh Earnest, told CNBC on Friday.

Perez admitted that this report was “clearly below expectation”, but pointed out that one reason for the disappointing numbers was that about 40,000 Verizon workers had been on strike for 44 days. The strike ended last week.

The US economy has now seen 75 consecutive months of private sector job growth and 65 weeks in a row where first-time claims for unemployment insurance came below 300,000, according to the US labor department.

“Even with last month’s report, which was soft, we are averaging 150,000 jobs a month. What we are also seeing now is a pretty good evidence of increasing wages,” said Perez. “Our average hourly earning have increased 3.2% in an annual rate so far in 2016, which is undeniably better than 2015.”

jobs added

Perez noted that he doesn’t expect 2016 to be as good as 2015 in terms of job growth.

“That’s not a surprise and that’s because as you get closer to the summit of full employment – and we are not at that summit yet – the steps that you take are shorter steps because you are climbing the tough part of the mountain,” he said.

The problem with this, however, is not the actual trends within the economy but how they are perceived by US voters. Certain trends or numbers amplified in election year can skew the perception of the actual state of the US economy.

To Americans whose paychecks have not grown in years, statistics about average hourly earnings increasing by five cents a month mean little. It’s the numbers they identify with that stand out. For example, there are 6.4 million Americans who are working part-time, but want full-time jobs. This past month, the number of such part-time workers went up by 468,000.

More than 7.4 million Americans are currently working more than one job to make ends meet. That’s up from 7 million a year ago. These are the numbers people remember – they know someone who is working two jobs. They know someone who wants more hours and cannot get them.

These numbers also play into Trump’s narrative – one of America that wants its jobs back from China and Mexico. By focusing his fire on the outsourcing plans of Mondelez, the maker of Oreos, and Carrier Corp, which manufactures air conditioners, Trump brought to the forefront another trend – one of a declining manufacturing industry.

May saw job losses in mining and manufacturing. Manufacturing lost 18,000 jobs last month. Mining lost another 10,000 jobs in May. Since the industry peaked in 2014, it had lost 207,000 jobs overall, according to the US labor department.

“The job losses in mining are an undeniable trend and they are a trend related to the fact that a gallon of gas costs a fraction of what it cost a few years ago,” said Perez. “For consumers, that is a boom. That’s equivalent to a tax cut of hundreds of dollars. For the industry, it has been obviously a challenge and we see it more now in the data over the period of roughly a year.”

A group of coal miners wave signs for Republican presidential candidate Donald Trump as they wait for a rally in Charleston, W.Va., Thursday, May 5, 2016. (AP Photo/Steve Helber)
A group of coalminers wave signs for Donald Trump as they wait for a rally in Charleston, West Virginia, last month. Photograph: Steve Helber/AP

As such, slowing job growth plays in Trump’s favor while putting Obama on the defensive and potentially hurting Hillary Clinton, who has embraced Obama’s economic legacy.

“It allows Donald Trump to tout how he would do things differently as president and focus on some of the job creation plans he has,” Republican strategist Ron Bonjean told Reuters.

A recent Gallup survey of 1,530 adults revealed that economy remains a top concern for US voters. More than 90% of them said that economy was extremely important to them and 89% of them said the same of jobs and employment. One in five respondents chose the economy as the number one issue that they want the next president to address.

The economy has manifestly improved under Obama’s tenure. But the recession has left deep scars and a worried workforce that fears the worst is still to come. And the one yelling the loudest about it, for now, is Trump.


Jana Kasperkevic in New York

The GuardianTramp

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