The job market appears to be on the mend, with the Labor Department reporting that 144,000 new jobs were created in August. But the much anticipated labor market report provides both presidential candidates with ammunition to make their case on the economy.
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President Bush will point out that in addition to the 144,000 new nonfarm payroll positions created in August, job growth in the prior month was stronger than was previously thought. The Labor Department went back and revised July job figures to show that 73,000 new positions were established that month, not 32,000 as was first estimated.
Moreover, the overall unemployment rate fell from 5.5 percent in July to 5.4 percent in August. That's the lowest level since the Sept. 11 , 2001, terrorist attacks. While the job market has experienced difficulty taking off, at the very least, the economy "has begun to fly again," notes Wells Fargo economist Sung Won Sohn.
Democrat John Kerry, however, is likely to point out that while 144,000 new jobs sounds decent, it is still below economists' expectations for about 150,000 to 160,000 new jobs. Moreover, in prior periods of economic expansion, the economy has typically created over 200,000 new jobs a month. Over the past two months, this economy has produced barely half that figure.
Furthermore, the Democrats are likely to argue that while the unemployment rate has dropped, it's why the figure fell that's important. According to the Labor Department, the slight reduction in the unemployment rate is not solely due to new jobs but also because an increasing number of out-of-work Americans are leaving the civilian work force. "The jobless rate edged down primarily because 152,000 people dropped out of the labor force," says Sohn, adding that this is "not an encouraging sign."
The Democrats may also point out that the economy needs to produce 150,000 new jobs a month just to keep up with the pace of the rising population. And the August figure just misses this mark.
How both candidates spin these results will be important, because they have only one other jobs report—the September figures—to quibble over before the November 2 presidential elections.
