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Defying the Odds

Defying the Odds
New book about the 2016 election.

Monday, September 8, 2014

The Meh Economy and the Election

This was not a good jobs report. Certainly not one that suggests a shift into a higher growth gear. The Two Percent-ish economy crawls on. The US economy added 142,000 jobs in August — much less than 225,000 expected — as the unemployment rate ticked down to 6.1%. But the jobless rate fell only because the labor force shrank by 64,000, notes economist Paul Ashworth of Capital Economics. The alternative household survey found employment increased by only 16,000 last month. Also, payroll gains in June and July were revised lower by 28,000, although those downward revisions were all in government. Private payrolls were actually nudged up, according to RDQ Economics. And consider: There are just 1.2 million more private jobs today than January 2008 despite 15.6 million more non-jailed, non-military adults. While the unemployment rate has dropped by 1.1 percentage points over the past year, the employment rate is up just 0.2 points.
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One more thing: Wages are still a problem, with average hourly earnings up just 2.1% the past year.
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Not that the number should be so surprising. The anemic economy is generating jobs at the top and bottom, not so much in the middle. “Average is over” as economist Tyler Cowen has put it And data yesterday from the Federal Reserve show that while income rose by 10% for the most affluent 10% of American families in 2010 through 2013, incomes were flat or falling for everybody else.
 People have noticed.  Pew reports:
For Americans, jobs are only part of the economic picture: 56% say their family’s incomes are falling behind the cost of living. That is about as many as said their incomes were falling behind in October 2008 (57%), during the Wall Street financial crisis.
And 45% say they have experienced one or more serious financial hardships – such as a job layoff, an inability to pay for health care or trouble with a collection agency – over the past year. Among those with low family incomes (less than $30,000 a year), fully 66% have confronted at least one serious financial problem.
The new national survey by the Pew Research Center, conducted August 20-24 among 1,501 adults finds that 33% say there are plenty of jobs available where they live, while 58% say that jobs are difficult to find. The share saying jobs are available has ticked up from 29% in July and 27% in April. Nearly two years ago, in December 2012, just 22% said there were plenty of jobs locally.
But the public’s views of the national economy – both current and future – remain bleak. Just 21% rate economic conditions as excellent or good, while 79% say they are only fair or poor. That is up modestly from earlier this year; in January, 16% expressed a positive view of economic conditions.
And so, Jackie Calmes writes at The New York Times:
With Friday’s disappointing jobs report for August, Democrats can pretty much give up any remaining hopes that voters will shake their gloom about the economy before this fall’s midterm elections.

After six consecutive months of monthly job gains exceeding 200,000, the Obama administration and Democratic candidates across the nation had harbored some optimism that the political climate might become less negative for their party if growth on that scale continued. It did not, despite analysts’ predictions of up to 250,000 new hires.