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By Patrick Sims, (202) 822-1205, email@example.com
Though it beat consensus with 163,000 jobs added in the nonfarm payroll survey, the number of employed persons according to the household survey fell by 195,000, causing the unemployment rate to rise to 8.3 percent. Overall, the economy added too few jobs for the unemployment rate to fall closer to 8 percent by Election Day. Additionally, the labor force participation rate ticked down one point to 63.7 percent. By our estimates, the economy will now have to add 279,000 per month to get below 8 percent by Election Day. What you see is what you get, and as we stated last month Time Has Run Out.
This is the last Jobs Day prior to both the Democrat and Republican national conventions, thus the narrative from this report will carry through to those events. The challenger Romney will stay on the attack and place blame on how the President’s policies have failed to make us better off. However, it will be interesting to see if the White House will provide voters something new in light of a continued slow growth in jobs and a stagnating economy. To the 3.4 million missing workers, in addition to the underemployed, something new may prove positive.
Where future growth should come from is clear.
As the consumer continues to rid itself of an overwhelming debt burden through a collapse in housing and credit, and governments retrench in the face of continued revenue loss, both consumption and government cannot be counted on to increase economic activity going forward. That leaves investment and exports to shoulder future growth. This was the message from Stephen Roach, ex-chairman of Morgan Stanley and current senior fellow at Yale University and the Jackson Institute. “American consumers’ unprecedented retrenchment has turned the US economy’s growth calculus inside out… Capital spending and exports…hold the key to this shift.”
The White House is aware of this, but will it introduce a new workable solution leading up to the election?
Patrick Sims directs research at Hamilton Place Strategies.ﾠ Prior to joining HPS, Patrick worked for SNL Financial as a lead research analyst in the financial institutions’ group.ﾠHe holds a degree in finance from James Madison University, and studied EU economic policy at the University of Salamanca, Spain.