May Jobs Report Is Much Worse Than Expected

The Labor Department said the U.S. economy added 69,000 jobs last month — far fewer than analysts expected. The unemployment rate also rose to 8.2 percent, up from 8.1 percent in April. The monthly jobs report is an important weather vane for anyone trying to get a bead on which way the economic winds are blowing.

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DAVID GREENE, HOST:

This is MORNING EDITION from NPR News. Good morning. I'm David Greene. There's bad news on the jobs front today. The Labor Department reports that the U.S. economy added just 69,000 jobs last month. Far fewer than most forecasters expecting. The unemployment rate inched up to 8.2 percent. This is the third straight month of slumping jobs numbers, and it comes just as the presidential race is heating up. The report may already have spooked investors, with the Dow down 200 points at one point this morning.

Joining us now to talk about this is NPR economics correspondent, Chris Arnold, and White House correspondent, Scott Horsley. Guys, hello to you both.

SCOTT HORSLEY, BYLINE: Good morning.

CHRIS ARNOLD, BYLINE: How you doing?

GREENE: Chris, 69,000 new jobs - less than half what experts were predicting. What is going on?

ARNOLD: Yeah, this is a terrible report. There's no other way around that. Everybody was disappointed by it, job growth was anemic across the board. We saw a big drop in construction jobs. People worked slightly fewer hours - that's not a good sign. I think part of what's going on here, is that the trouble in Europe seems to be making companies more cautious about hiring again. So, they get nervous, they don't hire as many people. The stock market also, like you mentioned, didn't like this. Stocks are down. So, all the way around, this was a dud if you were looking for good news.

GREENE: And three months in a row now, that we've seen pretty sluggish jobs numbers. I mean, this is beginning to seem like more than a blip.

ARNOLD: No, it's not a blip. This is, I think, now we can call it this a trend. And the average for the past three months is about 105,000 jobs gained per month. That's not nothing, but it's half of three month moving average that we saw earlier in the year. We should also note that March and April numbers, this time around, were revised lower and that's never a good sign. So, all this sounds really bad, but one economist I spoke to this morning said, look, the economy is still growing, we're still seeing moderate job growth. We shouldn't lose sight of that. And, he wasn't running around his desk, screaming and panicking. So, you know, not to be too dismal, but three months in a row, the momentum's moving the wrong way, and this is not a good report.

GREENE: Screaming and panicking, Scott Horsley, seems a good segue to ask you, does the situation at the White House - I know the president's traveling today - but are folks at the White House really nervous about this?

HORSLEY: Well, I haven't seen any outward signs of screaming and panicking, but make no mistake, this is a very tough bill for the president and for his reelection team to swallow. It re-enforces Mitt Romney's storyline that this president has done a poor job of managing the economy. And that Romney, with his business background, could do a better job. Now the Obama campaign's been pushing back on that, saying that while Romney made a lot of money for himself and his investment partners, it didn't always work out so well for the people that worked for him in the form of more jobs or higher wages. They also note that when Romney was governor of Massachusetts, that state ranked near the bottom of the country in job creation.

But, you know, one of the president's main arguments has been that the trend is moving in the right direction. That after the worst recession since the Great Depression, we've been headed in the right direction. Now that trend line has reversed and we're seeing things, the momentum, moving the wrong way.

GREENE: Well, policies, legislation, really tough, always, in an election year. But could the president have any policy answers for this trend.

HORSLEY: There's really nothing in the way of fiscal policy. In fact, there's been very little for the last year and a half, in the way of fiscal policy - with the exception of the payroll tax cut. And there's no appetite in Congress for additional spending to goose the economy. Certainly the Republicans, who control the House, have no incentive to do anything that might help the president. In fact, John Boehner's been actively threatening another debt ceiling showdown, which is certainly not helpful. So, no help from the political branches of government, maybe we'll see a little something from the Federal Reserve, but no guarantee.

GREENE: And Chris Arnold, in the brief time we have left, I mean, are the reports disappointing? And any silver lining, right now, in the economy?

ARNOLD: Well, one thing I would talk about is the weather and the seasonal adjustments. That the official number we got for construction jobs - we lost 28,000 construction jobs. That's not actually true. We gained 169,000 construction jobs. But, these numbers are always adjusted for seasonal factors and the weather might be goofing things up there, a bit. I think at some point, we are going to see more jobs coming from housing and construction. And you know, there's hope there.

GREENE: NPR's Chris Arnold and NPR's Scott Horsley. Thank you both.

HORSLEY: You're welcome.

ARNOLD: Thanks, David.

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