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Job market steadying but remains weak
WASHINGTON -- The September jobs report that arrives today, a month before the presidential election, will likely sketch a dual picture: The job market continues to heal. Yet it's far from full health.
No incumbent since Franklin Roosevelt has faced re-election with unemployment so high. The rate was 8.1 percent in August, up from 7.8 percent when President Barack Obama took office in January 2009. Economists predict that the rate reached 8.2 percent in September, according to a survey by FactSet.
It would be the 44th straight month in which unemployment has topped 8 percent.
Still, the job market has been improving, sluggishly but steadily. Jobs have been added for 23 straight months. There are now 125,000 more than when Obama took office. Economists predict 111,000 more were added in September.
The administration's defenders argue that Obama shouldn't be held accountable for job losses early in his term. When he became president in the midst of the Great Recession, the job market was collapsing. In January 2009, the economy lost 818,000 jobs, the grimmest showing since 1949. In the first four months of his presidency, 3 million jobs vanished.
Obama's economic prescriptions, particularly an $862 billion stimulus plan, didn't kick in until months after his inauguration.
Since bottoming in February 2010, the economy has added about 4.4 million jobs. And private companies have added more than 5 million -- a figure the White House likes to emphasize.
But job gains in the private sector have been partly blunted by layoffs by state and local governments.
And as voters prepare to decide whether to back Obama or his Republican challenger, Mitt Romney, many of the job market's vital signs are faint:
* More than 5 million people have been out of work for six months or more, up from 2.7 million when Obama took office. Before 2009, in records dating to 1948, the number of long-term unemployed had never reached 3 million. Federal Reserve chairman Ben Bernanke has called long-term unemployment a "national crisis" that is causing millions to lose job skills.
* Pay for private-sector employees, when adjusted for inflation, has dropped 1.6 since Obama took office. In a weak job market, employers have little reason to offer significant raises.
* The percentage of Americans either working or looking for work fell to a 31-year low of 63.5 percent in August. That's partly because the vast generation of baby boomers has begun to retire. But another key factor is that hundreds of thousands of Americans have given up looking for work.
-- More than 23 million Americans are either unemployed, stuck in part-time jobs because they can't find full-time work or want a job but have stopped looking. Romney used that figure to attack Obama's economic policies in Wednesday night's debate.
Few economists expect the job market to return to full health soon. The Federal Reserve, for instance, doesn't foresee unemployment falling below a normal level of roughly 6 percent before 2016.
Many economists say the recovery's persistent struggles are mainly the result of two causes: a financial crisis that dried up credit and a housing bust that left consumers feeling poorer and less willing to spend.
The U.S. economy, slowed by government cuts, weak manufacturing, a European economic crisis and tepid consumer spending, has been growing at a meager annual pace well below 2 percent. That is too tepid to generate strong job growth and significantly reduce unemployment.
High unemployment can cost presidents the White House. Unemployment was 7.8 percent when voters ousted President Gerald Ford in 1976. It was 7.5 percent when President Jimmy Carter lost to Ronald Reagan in 1980.
But Reagan survived 7.2 percent unemployment in 1984 to win re-election. Voters, who had seen the rate tumble from a peak of 10.8 percent two years earlier, felt the economy was improving.
Reagan's experience suggests that the level of unemployment matters less to voters than the direction in which it's heading.
Which might be good news for Obama's re-election hopes: Unemployment has fallen well below its October 2009 peak of 10 percent.