It is increasingly apparent what the economy will look like when President Barack Obama faces voters in November: pretty much what it looks like today.
And that picture, a report from the Labor Department made clear Friday, is far from the booming job growth that prevailed only a few months ago. In June, the economy added a meager 80,000 jobs, and the unemployment rate remained at 8.2 percent.
Early this year optimists buzzed that the jobless rate might touch below 8 percent by the election, a milestone that would be a major symbolic victory for the incumbent. Then employment growth slowed in March and took a turn toward the paltry in April and May.
With Friday’s report, what looked like a blip has now become a streak. And with a gridlocked Congress unlikely to pass any additional stimulus measures before the election, the president is stuck again with an economy in stall mode.
June’s job growth, after a revised increase of 77,000 in May, was just about enough to keep up with population growth but not nearly enough to reduce the backlog of 13 million workers.
Economists have scaled back their expectations for the rest of the year and are now forecasting continued sluggishness.
“This economy has no forward momentum and little help from monetary or fiscal policy,” said Kathy Bostjancic, director of macroeconomic analysis for the Conference Board. “As if that were not enough, ill winds are blowing in from both a contracting Europe and slowing growth in emerging markets. Also, domestic lawmakers’ inaction on the upcoming ‘fiscal cliff’ creates uncertainty that is not conducive to hiring.”
At a campaign stop in Poland, Ohio, on Friday, Obama urged voters to take the long view and to be mindful of the economic state he inherited.
“I want to get back to a time when middle-class families and those working to get into the middle class have some basic security,” he said. “We’ve got to deal with what’s been happening over the last decade, the last 15 years.”
Mitt Romney, Obama’s presumed presidential challenger, emphasized the more recent string of weak job growth that has taken place under Obama’s leadership.
“This is a time for Americans to choose whether they want more of the same,” Romney said from Wolfeboro, N.H., where he is vacationing. “It doesn’t have to be this way. America can do better. And this kick in the gut has to end.”
The recent string of weak employment growth may work to political advantage for Romney.
From December through February, private companies added an average of 252,000 workers a month. But then job growth slowed in March, leading some economists to wonder whether the unseasonably warm winter, rather than a fundamentally healthier economy, had been the real source of the short-lived employment surge.
“The net of it is not as if the economy is collapsing, but it wasn’t really as strong as it looked in December, January and February,” said Jim O’Sullivan, U.S. economist at High Frequency Economics.
By June, the weather payback should have faded, indicating that the slowdown may reflect more serious underlying problems in the economy, he said.
Since the recovery officially began in June 2009, there have been several spates of promising job growth, which raised hopes of a strengthening recovery that were ultimately dashed. Each time economists attributed the hiring slowdown to one-time negative shocks, including last year’s tsunami in Japan and the Arab Spring uprisings.
A healthier economy might have been able to withstand such shocks easily, but not one weakened by a debt overhang and sea of underwater homes.
“At this point, expectations are pretty low, so anything that is moving the job market in the right direction would be welcome,” said Sophia Koropeckyj, managing director at Moody’s Analytics.
Economists worry that even modest acceleration in job growth could be derailed by additional shocks both abroad and at home.
Corporate profits fell in the first quarter of 2012, the first decline since 2008, the Commerce Department reported last week. The overall drop was entirely because of falling profits abroad. While there are challenges across the developing world, including China, the primary foreign drag on the U.S. economy is still coming from Europe’s protracted sovereign debt crisis.
“When you factor in the effect on U.S. trade, financial markets and credit availability, the Europe crisis is probably taking a percentage point off of U.S. growth,” said Andrew Tilton, a senior U.S. economist at Goldman Sachs, of Europe’s impact on the United States’ gross domestic product.