August Employment Report Out Tomorrow at 8:30 am

U.S. Job Growth in August likely slower says this:

"The monthly jobs report, always a big event to Wall Street, will take on added importance in the next two months as the 2012 presidential election draws near.

Yet the odds of a big change in the employment picture are slim. Despite an uptick in hiring in July, economists predict the U.S. will continue to add jobs at a modest rate that’s disappointing by historical standards.

In August, economists surveyed by MarketWatch forecast the U.S. added 120,000 jobs, down from an initial estimate of 163,000 in the prior month.

{NOTE: We need to create approximately 250,000 jobs each month to achieve a meaningful reduction in our unemployment rates over time. Of course, we've fallen far short of anywhere near that number these past few years. When politicians brag about the jobs being added, they are neglecting to tell "the rest of the story." To wit, the truth is that we need close to ~150,000 added jobs each month just to stay even with the growth in population. And when the ongoing labor force participation rate decline is factored in as well, the situation for what used to be known as normalized economic conditions becomes even more problematical. All in all, we will have to get used to high unemployment until such time as real inflation adjusted economic growth achieves a consistent rate of 3% or so. It's not good news, but it's the truth of the matter. In other words, the news is the news, no matter how the pols spin it. Private sector investment is the only legitimate and lasting way forward and how long it takes our government officials to acknowledge and accept this simple and straightforward reality will determine how long unemployment stays unacceptably high and economic growth stays unacceptably low. END NOTE}

"While that’s enough to keep pace with the natural expansion of the labor force, it’s far too weak to slash the nation’s 8.3% unemployment rate. The U.S. would need to add about 250,000 jobs a month over several years to accomplish that goal and pull unemployment down to precession levels — a level, in fact, that Republican presidential candidate Mitt Romney promised in his acceptance speech.              

“We should remain in recovery mode, but it won’t be especially strong,” said Scott Brown, chief economist of financial-advisory firm Raymond James. “We have a lot of ground to make up in the labor market.”. . .

At the current pace of hiring, the U.S. is on track to average job growth of about 130,000 a month in 2012, down from 153,000 in 2011. And the chances that hiring will accelerate in the final months of the year appear to be fading.

That’s not good news for President Obama and Democrats. They are hoping for a boost in job growth and lower unemployment to improve their odds in the November elections. Republicans have seized on the jobless rate — unemployment has topped 8% for 42 straight months — to argue for a change in the White House.

Part of the reason hiring may not pick up is because of the political stalemate in Washington. Deep spending cuts and higher taxes will take effect Jan. 1 unless the two parties unite to change current law, but there’s almost no chance of a compromise taking place before the vote.

The threat of inaction has raised the specter of the economy falling off a so-called fiscal cliff, damaging growth in 2013 and perhaps even triggering another recession. Some business leaders have warned they will delay investment and hiring decisions until they know Washington’s plans.

“The outlook is weighing on business and orders,” said Sam Bullard, an economist at Wells Fargo in Charlotte. N.C., site of this week’s Democratic convention. “The fiscal cliff is not a distant prospect anymore. Firms are looking at their plans for next year.”

Summing Up

While perhaps one of the best houses in a bad neighborhood, the U.S. economy is showing renewed signs of weakening. Other countries are entering what could become serious recessions. Yet government monetary and fiscal policies are likely making things worse. It's a worldwide mess, and U.S. leadership is lacking. 

In any event, the August employment report will be released at 8:30 am Friday morning.

Forecasts call for an official 8.3% unemployment rate and the more informative and telling U-6 rate to stay around 15%.

But whatever the numbers, we have a very long road ahead and a very steep hill to climb.

I sure wish we'd get started climbing soon. Stay tuned.

If we continue to look to big government for financial security instead of looking within ourselves for individual opportunity, we'll all become more insecure. How ironic!

Thanks. Bob.