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The White House must be telling itself there are
still five months between now and Election Day, so the jobs picture
could brighten. After all, we went through a similar mid-year slump in
2011 but came out fine.
But however you look at today's jobs report, it's a stunning reminder
of how anemic the recovery has been -- and how perilously close the
nation is to falling into another recession.
Not only has the unemployment rate risen for the first time in almost
a year, to 8.2 percent, but, more ominously, May's payroll survey
showed that employers created only 69,000 net new jobs. The Labor
Department's Bureau of Labor Statistics also revised its March and April
reports downward. Only 96,000 new jobs have been created, on average,
over the last three months.
Put this into perspective. Between December and February, the economy
added an average of 252,000 jobs each month. To go from 252,000 to
96,000, on average, is a terrible slide. At least 125,000 jobs are needed a month merely to keep up with the growth in the working-age population available to work.
Face it: The jobs recovery has stalled.
going on? Part of the problem is the rest of the world. Europe is in
the throes of a debt crisis and spiraling toward recession. China and
India are slowing. Developing nations such as Brazil, dependent on
exports to China, are feeling the effects and they're slowing as well.
All this takes a toll on U.S. exports.
But a bigger part of the problem is right here in the United States,
and it's clearly on the demand side of the equation. Big companies are
still sitting on a huge pile of cash. They won't invest it in new jobs
because American consumers aren't buying enough to justify the risk and
expense of doing so.
Yet American consumers don't have the cash or the willingness to
spend more. Not only are they worried about keeping their jobs, but
their wages keep dropping. The median wage continues to slide, adjusted
for inflation. Average hourly earnings in May were up 2 cents -- an
increase of 1.7 percent from this time last year -- but that's less than
the rate of inflation. And the value of their home -- their biggest asset
by far -- is still declining. The average workweek slipped to 34.4 hours in May.
Corporate profits are healthy largely because companies have found
ways to keep payrolls down -- substituting lower-paid contract workers,
outsourcing abroad, using computers and new software applications. But
that's exactly the problem. In paring their payrolls, they're paring
And we no longer have any means of making up for the shortfall in
consumer demand. Federal stimulus spending is over. In fact, state and
local governments continue to lay off large numbers. The government cut
13,000 jobs in May. Instead of a boost, government cuts have become a
considerable drag on the rest of the economy.
Republicans will have a field day with today's jobs
report, taking it as a sign that Obama's economic policies have failed
and we need instead their brand of fiscal austerity combined with more
tax cuts for the wealthy.
But that's precisely the reverse of what's needed.