Issue of the week: A disappointing jobs report

Last week’s dismal jobs report “presents a political challenge” to President Obama, said Josh Boak in The Fiscal Times. The economy added just 88,000 jobs in March, according to the Labor Department, less than half of Wall Street’s expectations. The Obama administration “has tried to pin the blame on the start of the $85 billion in sequestration cuts last month,” but that pain is still to come. No, the real culprit is higher taxes—specifically, the 2 percent increase in payroll taxes that kicked in at the beginning of the year. Smaller paychecks “translate into less buying,” and therefore less hiring. These numbers suggest “that easing off years of government stimulus will be rocky. The economy remains in a fragile state.”

“One bad jobs report doesn’t make an economic calamity,” said John Cassidy in NewYorker.com. The “undoubtedly disappointing” numbers show that the total workforce fell by almost half a million last month. “But before hurling myself off the Brooklyn Bridge,” I need more solid evidence of decline. Let’s remember that payroll figures “come with a statistical margin of error of about 90,000.” It’s quite conceivable that “the real jobs figure was something like 166,000, which is the average figure” for the past year. And don’t forget that initial new jobs figures “usually get revised in subsequent months.” If the March figure of 88,000 follows the trend of previous months, “it will ultimately be about 120,000, which is a bit low but nothing startling.”

It’s too soon to “freak out about the prospect of another recession,” said Daniel Gross in TheDailyBeast.com. Other numbers suggest that consumers and the economy haven’t been thrown too far “off their game” by the double-whammy of the payroll tax increase and the sequester. Gains in housing, trade, employment, and the stock markets helped strengthen the economy in the first quarter, and some sectors have been hiring. Professional and business services added 51,000 jobs last month; construction employment rose by 18,000; the health-care and education sectors—which depend quite heavily on government spending—added 39,000 jobs. And while Washington’s austerity “looks like it is just beginning,” many states are projecting surpluses for the current fiscal year, which might mean “less pressure to fire and some capacity to hire” public sector employees.

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However you interpret the jobs report, “you can bet that the White House had a very close eye on it,” said Sean Sullivan in WashingtonPost.com. President Obama won’t face voters again, but the 2014 midterms “will be a pivotal moment for his second-term agenda.” Winning a Democratic majority in Congress is “a long shot,” but if the jobs outlook doesn’t improve, “it may be near impossible.” Bad news on jobs also threatens Obama’s bargaining power with Republicans for a long-term deficit deal. It had looked like they’d be “dealing with an Obama emboldened by a continued recovery in the economy.” They’d much rather face “a president who is playing defense against questions about why the employment picture doesn’t look better.”