September Jobs Report shows continued steady growth

Historically there have been two good indicators of the outcome of  a presidential election in America: the job approval of the incumbent administration, and employment numbers.

In a CNN/ORC poll conducted last week, President Barack Obama’s job approval among Americans reached 55 percent. Other polls have shown similar results; for instance, Gallup shows him at 54 percent.

That equals the highest level Obama has ever reached, a percentage he reached twice before in the poll, in January 2011 and January 2012. It is equiavalent to Ronald Reagan’s job approval in 1988, and slightly less than Reagan’s (1984) and Bill Clinton’s job approval number in 2000.

Only twice has the incumbent president’s approval been over 50 percent at this point and his party not won the election. The first was in 1960, and the second was in 2000, where Al Gore actually won the popular vote but George W. Bush prevailed [in Bush v. Gore, 5-4]. Americans think things are going pretty well. That’s horrible news for Donald Trump.

ApprovalPresidents

The September jobs report released today continues to show steady job growth. The seven-year-old economic recovery in the U.S. is already the fourth longest since 1850. Current U.S. economic recovery may end up as longest ever.

Steve Benen has the jobs report. Job growth remains steady as summer turns to fall:

Expectations headed into this morning’s jobs report was that the economy continued to steadily add new jobs last month, and the new data shows exactly that.
SeptemberJobs

The Bureau of Labor Statistics reported this morning that the U.S. economy added 156,000 jobs in September, roughly in line with projections. The unemployment rate inched higher, rising to 5% from 4.9%, but it’s largely for good reasons: more people entered the job market looking for employment last month. It’s also the 12th consecutive month the rate has been at 5% or lower.

As for the revisions: July’s job totals were revised down, from 275,000 to 252,000, while August’s were revised up, from 151,000 to 167,000. Combined, that’s a net loss of 7,000 [from the previous estimates.]

All told, like last month, this isn’t an especially exciting jobs report, though it does come against a notable backdrop: the Federal Reserve is weighing a possible rate hike, and after robust job growth in the early summer, an increase appeared more likely. Today’s mild BLS report may very well lead the Fed to hold off a bit longer.

Over the last 12 months, the overall economy has created 2.44 million new jobs, which is a pretty healthy number. What’s more, September was the 72nd consecutive month of positive job growth, which is the longest on record.

Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

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As for the political season, also note that this is the penultimate jobs report ahead of Election Day next month. There will be one other, which will be released on Friday, Nov. 4.

On this score, Jared Bernstein writes, The jobs report and the election:

At this point, every economic hiccup becomes campaign fodder. That’s not to say that this has been … um … the most fact-based or policy-oriented campaign season in recent memory. To the contrary, at times like this, such data get twisted every which way. So let’s take this opportunity to try to do two things. First, take an objective look at what’s up and what’s down in the job market, and two, muse a bit about the effect of these facts on the election.

On net, employers are adding jobs at a solid clip, nudging the job market toward full employment. That’s having two important, positive effects: It’s pulling more people off the sidelines and back into the labor force, and it’s boosting the pace of wage growth. There are, however, pockets of weakness in some key sectors.

Upsides

— Employment growth was up 156,000 last month, but the monthly data are noisy, and you’ve got to smooth out the bips and bops. Over the past three months, the average monthly gain is 192,000, a pace that’s fast enough to move us toward full employment (as you’ll see, however, we’re not there yet).

— The unemployment rate ticked up slightly, from 4.9 percent to 5 percent. Actually, it rose from 4.92 percent to 4.96 percent, an increase that’s statistically indistinguishable from no change at all.

— Moreover, as noted above, that slight increase in the jobless rate was largely due to over 400,000 people coming into the labor force last month, a positive development. A good way to look at this issue of people who should be in the job market but aren’t is to look at the share of “prime-age” workers with jobs. This metric tanked in the downturn but has made back about two-thirds’s of its loss (see here for more detail on the long-term, negative trend in employment rates). Over the past year, it is up 0.7 percentage points. If this trend persists it will be a real positive, as we need to chip away at this problem of unemployment among prime-age folks.

— One of my central themes is that as the job market tightens up, workers who are too often left behind get more bargaining clout. If your income depends on your paycheck, as opposed to … oh, I dunno … tax avoidance, full employment is your best friend. The figure looks at the recent trend in nominal pay for blue-collar manufacturing workers and non-managers in services — basically, middle-class workers. It jumps around some, but the trend shows clear acceleration.

— Since inflation has been low, real wage growth — the actual buying power of your paycheck — has grown more quickly over this business cycle than in previous ones.

Downsides

— There are still about 6 million part-timers who want full-time work. That’s about 4 percent of employment as opposed to 3 percent before the Great Recession. True, it’s well off its peak of more than 6 percent, but this dynamic is keeping the underemployment rate stuck at 9.7 percent, at least a point above where it should be at full employment.

— Slow global growth and the strong U.S. dollar continue to weigh on our manufacturers. Factory employment fell 13,000 last month and is down 58,000 so far this year. Since 2015, job growth in the factory sector has been flat, after rising more than 300,000 jobs from 2013-2014.

— Low energy prices have held down inflation and thus contributed to the wage result just noted, but they’ve also meant layoffs in oil and other extraction sectors.

— While hourly wage growth has ticked up some, average weekly hours have not, and that means weekly earnings are only growing about 2 percent for the middle-wage group noted above. That’s still beating inflation, which is only up about 1 percent, but this also signals the absence of full employment.

Putting it all together, the upsides solidly outpace the downsides. On net, there simply is no case that the job market, or for that matter, the U.S. economy, is in terrible shape.

Nor is everything great. Given the political salience of international trade in this election, what’s happening in the factory sector is important. I should note that the stronger dollar is far more a function of the fact that we’re growing faster than other advanced economies and the Federal Reserve’s plans to raise interest rates than it is evidence of currency manipulation. Still, as both presidential candidates have stressed, we should still worry about currency manipulation. I take my umbrella even when the sun’s out.

And I especially want to be careful not to overstate any recent wage gains. First, a big part of these recent gains comes from unusually low inflation. Second, there’s that average hours problem I just noted. If prices normalize before nominal wage growth and hours pick up, whatever gains less advantaged workers are finally seeing will be short-lived.

Like I said, this isn’t much of a policy-driven election. But if we want to boost the labor market upsides and shrink the downsides, we’re going to need policies that keep pulling workers in off the sidelines, like infrastructure investments. That means we’ll need fiscal budgets that support these investments, leaving no room for trickle-down tax cuts. We’re going to need higher minimum wages to support the wage floor for those whose bargaining power remains weak even at low unemployment. We’re going to need a manufacturing agenda that helps our exporters compete, and an energy agenda that recognizes the economic and environmental potential of alternatives to fossil fuels. We’ll need the Fed to hold off on tapping the brakes.

You will note that Bernstein’s policy prescriptions are those of the Democratic Party.  Simon Rosenberg at U.S. News breaks down the economic numbers in the “global age” since 1990, and concludes that the “data shows that the U.S. economy does better under Democratic presidents.” How America Prospers in a Global Age. His conclusion:

So a fairer characterization of this new global economic age isn’t one of relentless decline; it is one that acknowledges workers have been able to prosper and make gains, but that two recessions – one the second worst in the past century – wiped out many of those gains. Or to put it another way, when the right policies and team were in place, Americans have been able to prosper in this new age. And the opposite has been true as well. So perhaps it isn’t globalization or bad trade deals that have caused the struggle of far too many of late, but policies and leaders not capable of navigating a vastly changed economic, demographic, technological and geopolitical landscape.

Perhaps we have learned that you cannot conserve something that is no longer there.

Which is why the choice Americans are about to make for their president matters. The last two presidents who argued for aggressive military action abroad and regressive economic policies at home brought us recession, income losses and larger annual deficits. Those who argued for investment at home, an embrace of this new global age and its opportunities and a restrained multilateralism abroad saw long, sustained periods of growth, lower annual deficits and rising incomes. We’ve tried this four times now since the wall fell, and we have real data to guide us going forward. Americans have prospered and succeeded in this new age, and can do so again – but only if we follow policies that look far more like Hillary Clinton’s than Donald Trump’s.

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