Analysts Smell Fear After Lack Of Job Growth
If unusually warm weather helped encourage job growth earlier this year, May was like a wet, cold rain. A report from the Labor Department showed that U.S. employers added just 69,000 jobs last month — far fewer than expected.
Hiring ground to a halt in many different industries, in many parts of the country. Republican White House hopeful Mitt Romney seized on the report as fresh evidence to attack President Obama's handling of the economy.
The jobs numbers sent the Dow Jones industrial average plunging nearly 275 points.
"My sense is that it's fear," says Mark Zandi, chief economist of Moody's Analytics.
Zandi says would-be employers have been spooked by the sell-off in the stock market, the slowing growth in China and the European debt crisis that never seems to end.
"Business people are just very nervous. They've been through a lot. If anything goes off script, they pull back. They stop hiring," he says.
The 69,000 jobs added in May represent the slowest pace of hiring in a year. At the same time, hundreds of thousands of new job-seekers started looking for work. That sent the unemployment rate up to 8.2 percent.
Talking Jobs On The Campaign Trail
The disappointing jobs report comes at a bad time for Obama, since these are the months that tend to shape voters' opinions about the economy as they prepare for the November election. Obama stressed Friday that the U.S. is still adding jobs — just not quickly enough.
"We knew there would be ups and downs along the way," he said. "But we also knew if we were willing to act wisely and boldly, and if we were acting together as Americans ... and never quit, then we wouldn't just come back. We'd come back stronger than ever."
Romney argues the president has had three and a half years to turn the economy around. Speaking on CNBC Friday, Romney said the U.S. should be well into a robust recovery by now.
"Their policies have not worked, and in many respects their policies have made it harder for the economy to recover," he said. "I think that's one of the reasons why people are looking for a new direction."
Obama loyalists argue the struggling job market is less an indictment of the president's policies than the failure by Congress to pass them.
Jared Bernstein, formerly Vice President Joe Biden's chief economist, says the president hasn't been able to get much through Congress in the last year and a half, ever since Republicans took control of the House.
"The president has been pushing for policies which — if they were in place — the job market wouldn't be doing as badly as it is," he says.
For example, Obama has called for more federal spending on public works projects and local government, which might have prevented last month's loss of 28,000 construction jobs and 13,000 government jobs. But Congress never approved that spending.
Bernstein, who's now a senior fellow at the Center on Budget and Policy Priorities, says lawmakers have added their own measure of uncertainty with their refusal to compromise on taxes, spending targets and the debt ceiling.
"I think the political gridlock or dysfunction, if you will, has made things even worse. Now we're talking about going over this fiscal cliff and having another debt ceiling fight," he says. "That's obviously exactly the wrong medicine for the current economy. So it's not just that Congress isn't helping — it's that they're actively hurting."
Which Direction Is Right?
Obama renewed his call for congressional action on the jobs front Friday. And his re-election campaign has been busy criticizing Romney's record on job creation when he was governor of Massachusetts.
Still, Nathan Gonzales, deputy editor of The Rothenberg Political Report, says history suggests it's Obama who will be held accountable for the economy if things don't improve between now and November.
"Voters just want to feel like the country and the economy are headed in the right direction," he says. "And I don't know if enough voters believe that right now to help the president win a second term."
At this point, there aren't many months left to change their minds.