Bad News on Jobs

by Pejman Yousefzadeh on October 10, 2012

Everyone was singing hosannas last week regarding the fact that the unemployment number finally slipped below 8%. We ought to be concerned, however, that we may not get much positive momentum in the near term regarding jobs:

Job openings in the U.S. dropped for a second straight month in August, indicating companies are reluctant to beef up payrolls through year-end without faster economic growth.

The number of positions waiting to be filled fell by 32,000 to 3.561 million from a revised 3.593 million the prior month that was less than previously estimated, the Labor Department said today in a statement. Hiring increased at the same time firings rose to a three-month high.

Companies such as Foot Locker Inc. are facing a weakening global economy and the possibility of automatic tax increases and government cutbacks, helping explain limited payroll growth. At the same time, a jobless rate that fell below 8 percent last month for the first time in more than three years shows some progress in the labor market.

“A lot of firms may be back on their heels, reluctant to go out and expand,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “There is uncertainty due to the election, the fiscal cliff and Europe. We are definitely still adding jobs. The key question is how much more restraint we’re going to see from businesses.”

No one should be surprised by any of this. The economy is still in the tank and businesses are afraid to expand on the employment front. For all of the talk from the Obama administration and its allies that things are getting better, the fact is that improvement is coming much too slowly for those looking for work.

It would be folly to ignore the obvious political component to all of this, so I will go ahead and state that it comes as no surprise whatsoever that so many Americans are looking to institute a change in leadership come November 6th. There may have been a lot of attention paid to Mitt Romney’s tax returns and gaffes, but the bottom line is that Americans are wont to vote their pocketbooks. And that spells trouble for the Obama campaign

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