Obama Re-Election Momentum Hits Snag in April Jobs Report
A slowdown in job growth in April cuts the economic momentum behind President Barack Obama’s re- election bid as he prepares to officially begin campaigning.
U.S. employers added 115,000 workers to payrolls in April, the smallest gain in six months. The unemployment rate dropped to 8.1 percent as fewer people sought work.
Roger Altman, a deputy Treasury secretary in the Clinton administration and a senior economic adviser to 2004 Democratic presidential candidate John Kerry, called the monthly jobs report “pretty disappointing.”
“We need 200,000 to 250,000 jobs to really make this, or to illustrate that this is a healthy and strongish recovery,” Altman, chairman and founder of Evercore Partners, said in an interview on Bloomberg Television. “We’re nowhere near that.”
Private payrolls crossed a boundary in April to positive territory during Obama’s term, with a net gain of 35,000 since he took office in January 2009. Total payrolls remain lower than when Obama was inaugurated because there are 607,000 fewer federal, state and local government employees.
The jobs report was released a day before Obama formally opens his re-election campaign with political rallies in the swing states of Ohio and Virginia. Presumed Republican presidential nominee Mitt Romney has made the president’s stewardship of the economy a point of attack and polls show voters are focused on jobs and growth.
Romney termed the Labor Department report “terrible and very disappointing,” and called it evidence Obama’s policies aren’t working.
“This is way, way, way off from what should happen in a normal recovery,” Romney said in an interview on the Fox News Channel. “We seem to be slowing down, not speeding up.”
Stocks and bond yields dropped on concern a slowdown in hiring may restrain the wage growth needed to fuel consumer spending, which accounts for about 70 percent of the economy.
The Standard & Poor’s 500 Index declined 1.5 percent to 1.371.11 at 12:18 p.m. in New York. The yield on the 10-year Treasury note fell to 1.88 percent from 1.93 percent late yesterday.
The White House focused attention on the private sector adding jobs for 26 consecutive months.
Alan Krueger, chairman of Obama’s Council of Economic Advisers, said in a statement that the report “provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression.”
Speaking hours after the report was released, Obama said it shows more needs to be done to aid the recovery. He said he will keep pressing Congress to pass the components of the jobs proposal that he laid out last year and which were rejected by Republicans in Congress.
““There’s still a lot of folks out work which means we’re going to need to do more,” Obama said during an appearance at a high school in the Washington suburb of Arlington, Virginia. Congress “just saying no” to the administration job proposals is not an option, he said.
The median forecast in a Bloomberg News survey of economists was for payrolls to increase by about 160,000 and for the jobless rate to hold at 8.2 percent. March payroll gains were revised upward to 154,000.
Job growth during the last two months may be distorted by warmer-than-usual weather during the year’s early months. That probably pulled forward some hiring decisions, leaving less room for gains during the last two months.
Indicator for Voters
The unemployment rate is the economic indicator that dominates political and public discussion of the economy. Still, analysts said jobs data released six months before the election do little to sway voters. Signs of economic performance over the next six months are more important, they said.
“What happens now is just not relevant until you get much closer to the election,” Norm Ornstein, a congressional scholar at the American Enterprise Institute in Washington, said in an interview before the report’s release.
Ornstein also said growth in real disposable income in the last two to three quarters before the election offers the best gauge of how Americans will vote.
“It’s not just the rate, it’s how people feel,” he said. “It’s not like the average person out there is going to pay attention to what the jobs numbers are and say, ‘Gee, every one of my friends is out of work but this says things are getting better.’”
Only one U.S. president, Ronald Reagan, has been re-elected since World War II with a jobless rate above 6 percent. On Election Day 1984, the rate was at 7.2 percent, having dropped almost three percentage points in the previous 18 months.
While the jobless rate has declined since its peak during Obama’s term of 10 percent in October 2009, the drop has been slow and halting. It was stuck at about 9 percent through the first three quarters of last year.
Recent economic indicators have raised concern that the job market is cooling, mimicking a slowdown in early 2011. The world’s largest economy expanded at a 2.2 percent annual rate in the first quarter, slower than the 3 percent pace at the end of 2011, the Commerce Department reported last week.
Concern About Future
The Bloomberg Consumer Comfort Index (SPX) shows that Americans are still worried about their economic future. The index dropped last week to a two-month low as more Americans grew concerned about their personal finances. The index fell to minus 37.6 in the week ended April 29 from minus 35.8, surrendering gains that had lifted it to a four-year high last month.
While Americans remained pessimistic about the economy, their views did improve with the index rising to minus 64.3 from minus 66.4.
Real median household income in March was down $4,300 in since Obama took office in January 2009 and is down $2,900 since the recovery started in June 2009, according to an estimate from Sentier Research, an economic-consulting firm based in Annapolis, Maryland.
Catherine Mann, a professor at Brandeis International Business School said a lot could change between now and the election.
“Within six months we could see Europe finally getting their act together or the Euro collapsing,” she said in an interview before the report. “In six months we could see the bond markets look at the stalemate in the U.S. Congress and S&P and Moody’s downgrading us further.”