By Matt McDonald, (202) 822-1205, email@example.com
As we noted after last month’s job report, it was actually a very mixed outcome below the headline number of 244,000 new jobs.ﾠ There was a lot of talk in news coverage that the increase in the unemployment rate to 9% was a result of new entrants to the labor force.ﾠ This was not the case.ﾠ The increase in unemployment was actually because in the household survey, the economy shed 190,000 jobs last month, with little increase in the labor force.
That mixed report seems to have foreshadowed the weak numbers that we have seen over the past several weeks, with jobless claims back above 400,000 per week, continued decline in housing, slowing growth in manufacturing, and most notably anemic GDP growth of just 1.8 percent during the first quarter. ﾠAll this has contributed to downgrades in economic forecasts for the rest of the year.
The bad news looks set to continue with this week’s job report.ﾠ The ADP payroll report came in at just 38,000 new jobs, and the consensus for Friday’s job report according to a Bloomberg survey is an increase of 175,000 jobs.
For the unemployment rate to fall below 8 percent by Election Day, the economy needs to create 209,000 jobs per month going forward. This is a significant increase from last month, and represents a steeper climb for the President’s reelection campaign.
If indeed the jobs number falls short tomorrow, it will be interesting to see which of the Republican presidential hopefuls are able to effectively give voice to the jobs issue and how the president will respond to the issue from a policy perspective.
One thing is clear: if there are more months with economic news like May, this will be a long election cycle for the President and his campaign.
Matt McDonald is a partner at Hamilton Place Strategies and a veteran of two Presidential campaigns and the White House.ﾠ Prior to joining HPS, Matt worked for McKinsey & Company. ﾠHe holds an MBA from MIT’s Sloan School of Management and an undergraduate degree in economics from Dartmouth College.