CHARLOTTE, N.C. — President Barack Obama’s convention honeymoon lasted all of eight hours.
As soon as the president jetted out from a mostly successful convention here, he had to address another dismal jobs report suggesting the entire rationale for his campaign — that the economy is moving in the right direction, so just hold on tight — might be dead wrong.
(Also on POLITICO: Graph: Unemployment rate)
The latest jobs report showed the nation added just 96,000 job in August, a big drop from July and well below expectations. The unemployment rate dropped from 8.3 percent to 8.1 percent, but it did so for the worst possible reason: discouraged workers dropping out of a shrinking labor force.
There was nowhere to hide in a report that painted a picture of an anemic economic recovery that seems unable to take flight and ease the lingering concern among voters that a president they still like personally has nonetheless failed in his main task of boosting growth and jobs. The poor report from the Labor Department took on added significance for Obama after a convention acceptance speech that received decidedly mixed reviews — even from sympathetic Democrats in Charlotte — and included nothing new in the way of policy initiatives or fresh approaches to job creation.
Instead, Obama made the case that he needed more time to carry on with his current policies while warning that the tax cuts and deregulation proposed by Republican nominee Mitt Romney would return the nation to conditions that helped bring on the 2008 financial crisis.
Obama on Friday returned to his consistent theme that while growth is not fast enough, the nation has now created more than 4 million new jobs in 30 straight months of employment growth since the crisis bottomed out in 2010.
“Today we learned that after losing around 800,000 jobs a month when I took office, business once again added jobs for the 30th month in a row,” Obama said to the crowd of 6,000 outside the Strawbery Banke Museum in Portsmouth, N.H., in his first campaign appearance following the Democratic National Convention. “But that’s not good enough. We know it’s not good enough. We need to create more jobs, faster.”
But Republicans quickly seized on the report as a result of what they call Obama’s failed economic policies.
(Also on POLITICO: White House: Recovery continues)
In remarks to reporters, Romney ripped into the president.
“After the party last night, the hangover today, the jobs numbers were very disappointing. For almost every net new job created, approximately four dropped out of the workforce,” Romney said. “Seeing that kind of report is obviously disheartening for the American people that need work, and are having a hard time finding work. Real incomes, real wages are also not rising. this is a tough time for the middle class of America. There’s almost nothing the president has done in the past three and a half, four years that gives the American people confidence that he knows what he’s doing when it comes to jobs and the economy.”
The jobs number, while not disastrous, means Obama will continue to be dogged at least for another month by such sharp attacks and by persistent news headlines that could convince the small remaining block of undecided voters that the economy is not improving. The direction of the economy, more than any single number, is viewed by analysts as a critical factor in how late deciding voters make their choice.
Coupled with the three debates, the economic trend is one critical factor that could markedly shift what has been a very static race with Obama enjoying a small but persistent edge.
“It’s like ‘Groundhog Day’ for Obama with these numbers,” said Tony Fratto, a partner at Hamilton Place Strategies and a Treasury and White House official in the Bush administration. “It’s not a disastrous number, but it’s also far from a great number. Both campaigns will be able to keep making the same arguments, Obama that we are consistently creating jobs and Romney that it’s nowhere near enough and moving the wrong way.”
Democrats flying out of Charlotte airport on Friday tried to put the best possible spin on the numbers but seemed clearly deflated by the report. Many had expected a number close to 200,000, a figure that seemed plausible based on a private payrolls report out on Thursday that showed businesses added 201,000 positions in August.
“I was hoping for a little more, but we are making progress,” said Rep. Barney Frank (D-Mass.) as he prepared to board a flight. “Compared to the rest of the developed world, we are doing pretty well.”
Rep. Carolyn Maloney (D-N.Y.) made a similar point before heading home: “It’s 30 straight months of job growth, and we are clearly headed in the right direction.”
But the numbers tell a different and much more troubling story.
The drop in the unemployment rate was not a reflection of workers getting jobs but rather 368,000 workers leaving the labor force. And even at 8.1 percent, Obama would be trying for a second term at a jobless rate higher than any president since Franklin D. Roosevelt.
The numbers are also moving in the wrong direction, a bad sign for an incumbent. After averaging gains of 153,000 per month in 2011, the economy has added just 139,000 per month this year. Perhaps the most troubling number was the decline of 15,000 in manufacturing jobs.
Obama has based his campaign in part on an improvement in U.S. manufacturing that now seems to be petering out. Obama pledged in his speech here to create 1 million new manufacturing jobs by 2016, a promise that seems more dubious after this report.
Mark Zandi, chief economist at Moody’s Analytics, said the August number might not be as bad as it seems. He noted that because automakers did not slow production as much as they usually do in August, the government might have over-corrected in its seasonal adjustment process. “If you eliminate the noise, the underlying trend is pretty much the same,” he said, adding that the number should jump back above 100,000 next month.
But other data in the report were also discouraging.
The jobs number for June was revised down to 45,000 from 64,000 and July dropped from 163,000 to 141,000. The average work week remained stuck at 34.4 hours in August and the manufacturing work week declined by 0.2 hour to 40.5 hours. A lengthening work week usually precedes faster hiring as employers run out of room to get more productivity from current workers. Average hourly earnings also dropped in August by one cent to $23.52. In the last year, wages have gone up a tepid 1.7 percent.
“What we are seeing is a renewed slowdown in the labor market,” said Keith Hall, a former Bureau of Labor Statistics official now with the Mercatus Center at George Mason University. “Over the last few years growth has been weak, but it’s been enough to keep up with the labor force. Now we have dropped below that.”
The poor report comes after several positive economic headlines for Obama. Stock markets popped to four-year highs on Thursday after the European Central Bank suggested it would take whatever measures necessary to make sure no big nations in the common currency zone are allowed to fail. The prospect of a big eurozone collapse rippling through the global economy had been a scary overhang for the White House and the Obama campaign.
In addition, it is becoming increasingly clear that the Federal Reserve, possibly as soon as this coming week, will engage in a fresh round of asset purchases to help jump-start growth. But any action by the Fed and the elimination of fear over the European crisis probably won’t be felt until well after the election.
“It actually looks like the economy is setting up pretty well right now,” said Rep. Frank on Friday. “Unfortunately,n it’s setting up well for next year.”