The jobs report out this morning solidly confirms that the pace of job creation has once again slowed significantly.
Job growth for May came in at only 69,000 jobs, the worst month in a year. Unemployment ticked up to 8.2%. Moreover, April’s already weak jobs number was significantly revised downward, to 77,000, a markdown of 38,000 jobs. Weekly hours worked ticked down a bit as well, further confirming the weakening labor demand story told by these numbers.
The deceleration in payroll job growth is alarmingly clear (see figure). It’s useful to average the past few months to get a better feel for the underlying trend in these data. Over the past three months, net job gains have averaged 96,000 per month, compared to 252,000 in the prior three months.
Simply put, the job market is not providing workers with the employment and earnings opportunities they need to get ahead. This has obvious negative implications for family budgets, but it also threatens the macro-economy. If this pace of job growth sticks, the economy will slow down from a growth rate that’s already too slow.
So, will it stick? It’s always possible with these monthly reports that some statistical anomalies are in play. A candidate in this case is weather effects, as unseasonably warm weather last winter probably moved job growth that might have occurred in May to earlier months.
But my guess is that things won’t get a whole lot better in coming months. The slowing in job growth is consistent with a number of other indicators that slowed in May, along with Europe, China, and fiscal uncertainty regarding the fiscal cliff.
But here’s the thing: While external factors like European instability and a slower growing China are part of the problem, they are at its core. For that, we’ve simply got to look in the mirror.
The economic reason the job market is once again downshifting is because we as a nation failed to take out recovery insurance in the form of temporary stimulative fiscal policy against precisely the situation we now face.
The President proposed the American Jobs Act back in September of last year for just this reason. The economy in general, but especially the job market, has never reliably achieved “escape velocity,” i.e., persistently high enough growth rates that would put the set of the virtuous growth cycle of more jobs leading to more incomes, more consumption, which feeds back into greater demand, more jobs, and we’re off and running.
And the thing that has blocked us from taking out the insurance we needed was political gridlock. In fact, it’s worse. Beyond gridlock, dysfunctional Congressional politics have led to self-inflicted wounds to the economy, wounds that are being freshly reopened with talk about going over the fiscal cliff, another debt ceiling fight, and the loss of extended unemployment insurance benefits for hundreds of thousands of jobless Americans.
When politicians come to Washington not to solve our immediate pressing problems, not to compromise, but to promote, above the public interest, a narrow political agenda, then we shouldn’t be surprised at our inability to self-correct.
Jared Bernstein served from 2009 to 2011 as chief economist to Vice President Joe Biden, and as a member of President Obama’s economic team. He is currently a Senior Fellow at the Center on Budget and Policy Priorities, and an msnbc contributor.