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Anemic Growth Strands Unemployed Americans

Updated: 1 hour 55 minutes ago
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Joseph Schuman

Joseph Schuman Senior Correspondent

(Sept. 3) -- You can't rush the recovery.

That's the bottom line of the monthly employment report out today from the Labor Department, which shows American industry continued to create jobs in August but at an anemic rate. And that's an inconvenient political truth for the Obama administration going into the Labor Day weekend.

U.S. nonfarm payroll employment fell by 54,000 jobs last month, mostly because of the government's ongoing release of the hundreds of thousands of temporary workers for the census. This wasn't as bad as many economists -- burned by their foiled predictions for stronger jobs numbers in the spring and early summer -- had feared. And while the unemployment rate edged higher, to 9.6 percent, that was actually a good sign.

Private-sector payrolls rose by 67,000 for the eighth consecutive month of growth. But that's paltry for an economy that needs to generate roughly 200,000 new posts a month just to keep up with the new graduates and immigrants that enter the labor market, and that lost more than 8 million jobs during the Great Recession.

It also seems to be both a cause and effect for the slowing pace of recovery. The latest government reading of economic growth showed the U.S. gross domestic product expanded at an annual rate of just 1.6 percent in the second quarter, down from 3.7 percent in the first three months of the year.

Paycheck anxiety prompted consumers to start spending less, which in turn contributed to employers' unwillingness to hire despite the strong GDP numbers earlier this year. And that highlights the disparity between how an economy is, and how it feels to the people in it, which is just as important economically and politically, as President Barack Obama noted today.

US President Barack Obama, standing alongside members of his economic team, speaks on the economy in the Rose Garden at the White House in Washington, DC, Sept. 3.
Saul Loeb, AFP / Getty Images
President Barack Obama, standing alongside members of his economic team, speaks on the economy in the Rose Garden at the White House in Washington, D.C., on Friday. "There's no quick fix to the worst recession we've experienced since the Great Depression," Obama said.
"As I've said from the start, there's no quick fix to the worst recession we've experienced since the Great Depression," Obama said after the new numbers came out. "The hard truth is, is that it took years to create our current economic problems, and it'll take more time than any of us would like to repair the damage. Millions of our neighbors are living with that, painfully, every day."

Only One More Pre-Election Employment Report

The economy and especially the weak jobs market have become one of Republicans' biggest lines of attack against Democrats going into midterm elections. With only one monthly employment report due out before the November vote, that story line is almost sure to remain negative and one Republicans will continually try to tie to Obama.

"What we have here is a bad fiscal policy coming from this administration," Republican Rep. Paul Ryan of Wisconsin told CNBC. "We should be growing, not at 1.6 percent, but coming out of a recession like this, we should be growing at 5 or 6 percent."

In the past few months, during a White House publicity push it originally billed as the "summer of recovery," officials at the Federal Reserve and in the administration were first surprised and then frustrated with the slowing pace of job growth.

Obama promised to announce next week "a broader package of ideas" for stimulating the economy. He also called again for Congress to pass a bill aimed at boosting job-creating investments by small businesses that has been held up in the Senate.

"But the key point I'm making right now is that the economy is moving in a positive direction," he added. "Jobs are being created; they're just not being created as fast as they need to, given the big hole that we experienced."

And the president had a point: There have been signs of improvement.

On the Plus Side

The Labor Department's separate survey of households produced an unemployment rate of 9.6 percent, up from 9.5 percent in July. But this is only because more people entered the official tally of the work force used to calculate the rate. And since only job holders or job seekers are included in the work force, this means more unemployed people were confident enough to start looking for a job again.

Moreover, the number of people unemployed for 27 weeks or more fell by 323,000 to 6.2 million, the third monthly decline, even if the ranks of long-term unemployed Americans still outnumber the population of a small country.

And the number of discouraged workers -- people who aren't looking for work because they believe no jobs are available -- edged slightly lower to 1.11 million.

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The Labor Department also revised its readings of payroll evolution for June and July to reflect greater private-sector job creation than it previously thought.

And it said that last month the average workweek and average hourly earnings for employees on private nonfarm payrolls both increased, in what could be a sign that employers will soon need more workers. On a similar note, the Federal Reserve's recent report on industrial production in July showed manufacturers were turning out a greater share of the sustainable output with their current staff levels, which could also be a precursor to more hiring.

But these positive signs are overshadowed by the epidemic of joblessness still out there, which is what makes headlines and leaves the impressions voters will take with them to the polls.
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