Last Friday the Labor Department released its monthly jobs report. The data was disappointing, to say the least: employers added just 54,000 in May and the unemployment rate moved up to 9.1%. This employment number is the lowest in eight months and was far worse than the gain of 175,000 jobs economists previously predicted before Thursday’s ADP number .
Given population growth the US economy needs to add roughly 150,000 jobs per month just to break even with workers coming into the system. That means that even though 54,000 people got new jobs last month, overall the US labor market shrunk.
Also discouraging were the estimates on the two previous month’s jobs numbers. In March the Labor Department had reported an increase of 221,000 which now has been reduced to 191,000 and April’s number was cut from 244,000 to 232,000.
Many economists described May’s weak number as a temporary lull, stemming from high gasoline and food prices and supply disruptions in auto and technology manufacturing following the March earthquake and tsunami in Japan.
President Obama and the Democrats are hoping that these economists have it right. In his weekly radio and Internet address, broadcast Saturday, the President highlighted the “head winds” that are affecting the United States. “Even though our economy has created more than two million private sector jobs over the past 15 months and continues to grow, we’re facing some tough head winds,” he said. “Lately, it’s high gas prices, the earthquake in Japan, and unease about the European fiscal situation. That will happen from time to time. There will be bumps on the road to recovery.”
Yet, the Republicans are pointing to May’s job number as evidence that the President’s policies are not working. Former Minnesota Governor and Republican Tim Pawlenty said on Friday that, “Today’s underwhelming job numbers report demonstrates President Obama’s failure to address the tough challenges we face as a nation. We need a leader to stand up and make the difficult choices essential to spur economic growth and create new jobs.”
Whether or not May’s dismal jobs number is the beginning of a trend or is just a temporary dip, I believe unemployment is going to be the key issue during the next presidential race in 2012. Americans, especially the unemployed, are mad and frustrated with the state of the economy. As their patience wears thin, President Obama will try and reassure them that under is leadership things are headed in the right direction. However, history has proven this will be no easy feat – no president since Franklin Delano Roosevelt has won re-election when the unemployment rate was higher than 7.2 percent.
What do you think? Do you think unemployment will be the key issue in the next Presidential race? Is the May unemployment data the start of a worsening trend for the labor market? Or do you think this is a temporary setback amidst the recovery? Please leave your comments below.