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September 07, 2012
WASHINGTON — The U.S. economy added just 96,000 jobs in August, fewer than economists were expecting. The jobless rate fell from 8.3 to 8.1 percent - but only because more Americans stopped looking for work. Financial analysts say the latest job numbers could play a big role in the coming presidential elections. Economic factors outside the United States, however, also may be at play.
The August job numbers mark the 30th month of private-sector job growth, though just barely. Experts say the economy needs to add at least 100,000 new jobs each month just to keep up with population growth.
Economist Marcus Schomer at Pinebridge Investments called the latest jobs report underwhelming.
"The non-farm payroll number 96,000, that was quite disappointing. I was looking for a much stronger increase. In fact, my forecast was 175,000," said Schomer.
So what happened? Schomer believes the job numbers reflect growing uncertainty over the country's economic direction.
"It is the uncertainty over taxes, the uncertainty over spending, the uncertainty over politics, the uncertainty over Congress and I think that's exactly what's holding back business activity, business sentiment and at the end of the day, it's holding back hiring," said Schomer.
With less than nine weeks to go before Americans head to the polls, the sluggish job market could hurt President Barack Obama's re-election chances.
Michael K. Farr is head of an investment firm in Washington and has written several books on surviving the economic downturn. He said the latest job numbers could be problematic for the president.
"It's crucial politically, it's less crucial economically. I think, you can look back and there have been no presidents re-elected when unemployment's north of [above] 8% [since World War II], so for President Obama, this is a very tricky detail," said Farr.
External factors also could play an outsized role in whether companies hire workers. Farr said a downturn in Europe - the United States' largest trading partner - may hurt the president.
"Europe is a huge threat right now. The euro and the survival of the euro in what are insolvent, sovereign economies. It's hard to call Europe a surprise, but it could be the October problem," said Farr.
The unemployment rate has remained above 8 percent since February 2009, a fact Republican presidential candidate Mitt Romney argues is reason for Americans to choose a new leader.
But in accepting his nomination for a second term, Obama asked for more time. And on Friday, he reminded Americans that his policies have added 4.6 million private-sector jobs - following the worst economic downturn since the Great Depression.
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