Unless something explodes, bursts into flame, or is hijacked the big news of the day is likely to be the Bureau of Labor Statistics Employment Situation report for May. The report is not good. A net of only 69,000 jobs was added to an economy that needs almost twice that just to employ the new people who enter the labor market as a result of the natural increase. To add insult to injury April’s tepid 115,000 was revised down to 77,000. Here’s what Barry Ritholtz said in anticipation of the announcement:
Net new jobs has clearly been on a downslide since the peak 5 months ago.
A variety of other data points suggest a slowing of the economy, but not an imminent recession. However, it wont take much int he way of negative data to raise those fears again.
The overall trend in employment has been muddling along, 100-200k for most of the past year. Consensus is for 150,000 new jobs following the punk April report of 115,000.
When you combine the very slow (or no) GDP growth announced yesterday to this jobs report, it paints a picture of an economy that has passed the peak of the present business cycle and is slowing towards the trough of the next recession. This was a point at which we really needed robust growth.
It’s been clear for some time that the strategy of the president’s re-election campaign is to produce fear, uncertainty, and doubt about Mitt Romney, the presumptive Republican nominee. It is a strategy not without risks—for example, it jettisons the hope and change campaign of 2008 and at least some of the voters who supported Barack Obama for those reasons.
One thing that could derail the strategy entirely is a domestic economic situation that is itself so frightening coupled with a lack of any plan for altering its present trajectory that is so obvious that they overwhelm any fears, uncertainty, or doubt about what the other guy would do on the grounds that anything would be better than this. This month’s employment situation report is not good news for the president’s re-election campaign strategists.