One of the first analysts to publish an assessment of the dismal U.S. May jobs report was House Leader John Boehner.
Within four minutes of the Labor Department release, Mr. Boehner, a Republican from Ohio, released a statement that pinpointed what it is that is holding back the U.S. economy: his political opponents.
“Our economy is not creating enough jobs, and Democrats’ binge of taxing, spending, borrowing and over-regulating is a big part of the reason why,” Mr. Boehner said. “We will not have economic growth if we raise taxes on job creators and refuse to stop spending money we don’t have.”
That’s one argument. Another argument is the Bush administration’s decision to cut taxes while fighting two wars starved the government of revenue and a couple of decades of under-regulating created the conditions for the financials crisis.
With the exception of the some seven million people who remain unemployed since the start of 2008, there’s no one who cares more about the monthly jobless reports than the politicians who are lining up to do battle in next year’s elections. The latest results – a gain in non-farm payrolls of 54,000, which is too slow to keep up with natural gains in the labour force; and an increase in the unemployment rate to 9.1 per cent from 9 per cent – are decidedly negative for President Barack Obama.
No American president has won a second term since Franklin Delano Roosevelt with an unemployment rate of higher than 7.2 per cent. To win in November 2012, Mr. Obama will have to test history. The unemployment rate on Election Day will most likely will be well above 7.2 per cent.
Matt McDonald, a partner at Washington-based Hamilton Place Strategies and former White House staffer, reckons Mr. Obama has a chance if the unemployment rate falls to 8 per cent by the time of the election. Mr. McDonald argues that the trajectory of the unemployment rate is more important that the actual level – and voters would reward a drop to 8 per cent from a peak during the recession of around 10 per cent.
By this measure, the latest jobs numbers are terrible for Mr. Obama and risk weakening his hand as he negotiates a debt-limit agreement with the Republicans. Mr. McDonald says the U.S. economy must create 209,000 a month between now and Election Day to drop the unemployment rate below 8 per cent.
The Obama administration is struggling to put a positive spin on the jobless report. Speaking on CNBC, Labor Secretary Hilda Solis said the economy has created an average of about 200,000 jobs over the past four months. “We knew all along there would be some bumps on the road,” Ms. Solis said. “We are going through that now.”