The economy added only 120,000 jobs in March -- down from the rate of more than 200,000 in each of the preceding three months. The rate of unemployment dropped from 8.3 to 8.2 percent mainly because fewer people were searching for jobs -- and that rate depends on how many people are actively looking.
It's way too early to conclude the jobs recovery is stalling, but there's reason for concern.
Remember: Consumer spending is 70 percent of the economy. Employers won't hire without enough sales to justify the additional hires. It's up to consumers to make it worth their while.
But real spending (adjusted to remove price changes) this year hasn't been going anywhere. It increased just .5 percent in February after an anemic .2 percent increase in January.
The reason consumers aren't spending more is they don't have the money. Personal income was up just .2 percent in February -- barely enough to keep up with inflation. As a result, personal saving as a percent of disposable income tumbled to 3.7 percent in February from 4.3 percent in January.
Personal saving is now at its lowest level since March 2009.
American consumers, in short, are hitting a wall. They don't dare save much less because their jobs are still insecure. They can't borrow much more. Their home values are still dropping, and many are underwater -- owing more on their homes than the homes are worth.
The economy has been growing but almost all the gains have gone to the very top. As I've noted, this is the most lopsided recovery on record.
You will hear other theories about the hiring slowdown, but they don't wash.
It's not due to "uncertainty" about the economy. That's a tautology -- the economy's future is always uncertain, especially when consumers don't have the dough to keep it going.
It's not because of fears about a European recession. Europe has been in the skids for some time now. Besides, the American economy doesn't really depend on exports to Europe.
And it's not about gas prices or the rise in health care insurance premiums. Both are up, but they've been trending up for many months.
It's because consumers' pockets are almost empty.
We'll avoid a double-dip, but the most likely scenario in coming months is a continuation of the same -- an anemic jobs recovery.
President Obama will claim the economy is improving -- and, technically, it is. Growth this year will most likely average around 2 percent. The problem is, most Americans aren't feeling it in their paychecks.
Mitt Romney will claim the economy is in terrible shape -- and there will be enough evidence to justify his "cup-half-empty" rhetoric.
But when it comes to explaining what's really wrong with the economy, Romney is the perfect foil for Obama because Romney represents the richest of the rich -- a man who raked in more than $20 million last year, and paid a tax rate of just 13.9 percent (lower than much of the middle class).
He made that money by buying up "under-performing" companies -- that is, companies that employed more people than they needed to, and carried less debt than was necessary to show big profits (interest on debt is deductible from company income). Romney's firm, Bain Capital, made him and his colleagues fortunes by firing workers and loading companies up with debt.
And there's America's economic problem in a nutshell.
Romney and his ilk are doing wonderfully well, but the rest of the nation is still in deep trouble. Yet the U.S. economy can't fully recover on the spending of millionaires.
The president has already announced that this election is about America's surge toward ever-greater inequality. He's right. And this painful recovery shows it.
It would be sadly ironic if Obama lost the election because the economy responded to widening inequality exactly as expected.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
Richard (RJ) Eskow: Want Jobs? Rescue Homeowners -- and Spend, Baby, Spend
Is our country soooo prejudiced that they will elect ANYBODY that is white and not Obama?
.... and again.
......... and again.
:)
RE: "The president has already announced that this election is about America's surge toward ever-greater inequality. He's right. And this painful recovery shows it."
I think it was WISE that OBAMA acknowledged this - I hope he has the SKILL needed to turn this Depression around (IMHO, we are in a Depression). In truth, the USA needs FDR. We also need a VERY CLEAR DECISIVE HIGHLY-TARGETED strategy to enable working people recoup jobs, and improve WAGES.
Minimum wage earnings for workers, while MILLIONS $$$$$ are amassed by people like Romney simply takes the USA back to the times of the Robber Barons, like Carnegie, Vanderbuilt, etc....
RE: "It would be sadly ironic if Obama lost the election because the economy responded to widening inequality exactly as expected."
Again, (IMHO) it's WISE for Obama to acknowledge how much remains SERIOUSLY WRONG in our Country - if he fails to acknowledge that Millions of Americans continue to SUFFER & STRUGGLE, he could easily lose respect, credibility, & VOTES of persons like myself - I want a STRONG, AGGRESSIVE, PROGRESSIVE President who is smart enough to grasp REALITY. (FDR is not available, unfortunately.) Suggestions that our Economy is on an upswing are ridiculous.
Are our Politicians simply burned-out & brain-dead? We're ALL looking to OBAMA to fix this mess......is there NO ONE in the USA who has a CLEAR & VIABLE stratedgy to FIX our Economic Disaster?
“A government big enough to give you everything you want, is big enough to take away everything you have.” (Thomas Jefferson)
Based on mainstream media reports and liberal pundit commentaries, one would think that America’s economy had turned a corner, that massive numbers of people were getting back to work, that the re-recession was over, that God’s in His heaven and all’s right in Obamaworld.
Much as all Americans would love to believe that rosy picture, it would be as accurate as believing Obama reveres the United States Constitution.
The Bureau of Labor Statistics released data on Friday showing that 120,000 jobs opened up in March and that the official unemployment rate declined from 8.3% in February to 8.2% last month, the lowest rate in over three years.
That was the good economic news, deceptively good and the only good news.
In point of fact, those 120,000 jobs represented a 107,000 decrease from February’s numbers and far less than the expected 205,000 and were the fewest jobs added in five months, people are leaving the workforce in droves with a record 88,000,000 now not employed at all, the Institute for Supply Management’s factory index was 53.4 in March, down from a high of 59.9 in January, 2011, and Americans are working fewer hours and earning less money.
If this is a recovery, what’s a recession?
CNBC’s voice of reasoni, . . .
(Read more at http://www.genelalor.com/blog1/?p=20864.)
These are Socialist Democracies with Nationalized Healthcare & very high Quality of Life.
Essentially, these are stable Nations who have remained civilized.
Everything is leveraged to the illegal (or perceived legal hilt) just so companies and CEOs can stuff their shirts with all kinds of money with no long-term plan or liability in sight.
Nobody runs a company to "run" it anymore. That's so old school.