Even with the Democratic National Convention ending last night in a roaring finale punctuated by President Barack Obama's keynote speech, the big news of the day is America’s unemployment now stands at 8.1%.
The economy added a net seasonally adjusted 90,000 new jobs in August. So what does this all mean to you and I or in the context of the presidential election?
A year ago, the Department of Labor and Statistics reported America added “Zero” new jobs. While that number was revised – as it typically is – to show a small increase in net seasonally adjusted employment, 9.1% of Americans were deemed unemployed.
Many, although not all, economists believed the American economy was headed toward a double dip recession. This concern was substantial enough within the Obama administration to elicit a new call for a “Jobs Act” concentrating on infrastructure development coupled with extending a variety of tax reduction initiatives the majority of which failed to be acted upon by Congress.
Yet a year later, American Equities markets have risen to heights not seen since the onset of the Great Recession. American Corporate profits are at half decade highs. Somehow, the American economy avoided dropping into recession and has added new private sector employment every month.
Which brings us to the news of the day, with unemployment now standing at 8.1%.
So what does this all mean to you and I, and in the context of the 2012 election?
President Obama will strive to convince voter’s that the jobs number prove his policies are working. He will argue that we would have seen an even lower unemployment rate had his September 2011 Jobs initiative been enacted. He might even look to global factors such as the ongoing contraction of the EU’s economy and spin today’s numbers to in fact be encouraging from a more global view of employment.
The GOP will fire back, 8.1% unemployment is unacceptable. They will note the costs associated with stimulating the economy have added a historical amount of debt to future generations of Americans. Once again, we will all hear their plan for lower corporate taxes and decreased regulation are the answer to our sputtering recovery. They will conclude that 40 consecutive months of unemployment above 8% is reason to replace Obama.
So who is right?
There will be two additional employment reports before Election Day on Nov. 6. But by then, more Americans will have made up their minds.
"It’s the most important economic data point we have between now and Election Day," said Tony Fratto, a White House spokesman under President George W. Bush.
In his DNC speech Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy. The biggest threat to Obama would be a rise in the unemployment rate, the most visible economic statistic for most voters. The rate is basically the same now as it was in January.
For the White House,even today’s good news represents a difficult response to voters ask, "If you’re creating jobs every month, why isn’t the unemployment rate improving?"
Friday’s jobs report unfortunately, is one which will raise more questions than answer them. Only 90,000 jobs created was far from sufficient to actually drop the unemployment rate even one-tenth of a point. For those who read the entire report by BLS, once again, the drop in American unemployment was caused more by workers reclassified as no longer seeking employment than actually those who found new jobs.
Few economists disagree, the American economy needs to add roughly 250,000 jobs per month to make progress reducing the nation’s unemployment rate toward pre-recessionary levels. You must now decide, which candidate and which party are most capable of enacting the policies necessary to make job creation possible.