Saturday, June 2, 2012

As Predicted, the May Jobs Report Confirms the Slowing of the U. S. Recovery

Obama Re-Election Campaign Dealt Serious Blow – Republicans Ecstatic

For reasons totally beyond the understanding of anyone paying any attention to the numbers on the U. S. economy, a whole bunch of so-called experts expected the May jobs report to be rather positive.  The stock market, which should have known better was totally surprised.

Stock markets tumbled on the report. The Dow Jones Industrial Average notched its worst showing of the year Friday, falling 274.88 points, or 2.2%, to 12118.57. Investors snapped up U.S. Treasury bonds instead, pushing down yields to the lowest level on record yet again. The yield on the benchmark 10-year Treasury note finished at 1.467%. Bond prices and yields move in opposite directions.

This was not going to be a surprise.  This Forum, which is not the most savvy of sites showed earlier how the economy was slowing and the indications of why the May jobs report was gong to be bad.  Apparently the Obama team, which ought to have at least halfway intelligent economists along with the market was totally clueless.

Friday's jobs numbers caught the White House and the Obama campaign by surprise.

That movement of money into Treasuries is not a confirmation that the U. S. economy is ok, it is a confirmation that investors are scared and want the safety of U. S. debt.

As for the jobs report, it’s hard to see how it could have been any worse for an economy that is supposed to be recovering.

source;  Wall Street Journal - June 1, 2012

Employers added a seasonally adjusted 69,000 jobs last month, the smallest increase in a year, and estimates for the two previous months were lowered. The politically salient unemployment rate inched up to 8.2% from 8.1% in April, 

And the jobs report was not the only bad news.

Jobs were only one of the worrisome economic indicators released Friday. A separate report showed U.S. manufacturing growth cooled in May, with sharp drops in both production and exports.

Another report showed consumer spending rose in April—but outpaced incomes—suggesting many consumers are strapped for cash.

All of this just pushes the economy to the front burner on the political campaign.  All that stuff about how Republicans hate women, hate minorities, hate immigrants, hate gays and lesbians gets shunted aside.

Mr. Romney seized on the report as evidence Mr. Obama has mismanaged the economy. "The president's policies and his handling of the economy has been dealt a harsh indictment this morning," Mr. Romney said in an interview with CNBC.

And Mr. Obama is now forced to campaign on the theme ‘yes, we haven’t done a very good job but Mr. Romney and his policies would make things worse’.  That is true.  Mr. Romney's first priority, eliminating the Estate Tax so that he and other mega wealthy individuals may pass on hundreds of millions to their children tax free will not create jobs.  Ending the subsidy for PBS will not create jobs or even make a slight dent in the deficit.  Cutting taxes for wealthy people, privatizing Medicare and ending abortion rights and marriage rights will not create jobs.  Like Mr. Obama, there is nothing Mr. Romney can do about Europe because that problem must be solved by Europeans.  Want to know how economics plays out under a Romney Presidency, look at Britain.

America has lived through Republican policies under George W. Bush and learned a lesson.  Now they are in the process of forgetting that lesson.  So Mr. Obama must try to win re-election on the theme that Mr. Romney and a Republican Congress will really mess things up.  Not exactly a winning strategy, and American voters are likely to give Mr. Romney and the Republicans the opportunity to do so.  .

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