Upbeat Jobs Report Adds to Economic-Political Puzzle

(May 7) -- The U.S. economy is creating jobs at a pace that could start to erase the scourge of unemployment inflicted by the financial crisis. But that good news comes at a time of heightened economic uncertainty that clouds both the outlook for jobless Americans and the implications for next fall's elections.

The Labor Department said today that non-farm payrolls increased by 290,000 in April, and it revised upward the job creation numbers for recent months for a total of 573,000 jobs added since December. The vast majority of that job growth came in March and April. And though government hiring for the census played a role, more than 84 percent of those jobs were in the private sector.

"I'm happy to report that we received some very encouraging news," President Barack Obama told reporters in the White House Rose Garden a few hours after the data were released. The comment was a burst of relative optimism for Obama, who for months has tempered positive economic news by cautioning that job creation is the "truest measure of progress."

The fourth consecutive month of improving payrolls was indeed encouraging, especially the addition of 44,000 new manufacturing jobs -- the most since 1998 -- and new hiring in the construction sector.

And the other big number from the government, an unemployment rate that rose to 9.9 percent from 9.7 percent in March, was more positive than it seemed at first glance.

Employment numbers come from a separate survey of households rather than the larger survey of businesses that produces the payroll report. And the government counts jobless people as unemployed members of the workforce only if they have been looking for work in the past four weeks.

That higher unemployment percentage comes from the fact that more jobless Americans said they are again seeking work. Some 805,000 more people joined the workforce in April, and 195,000 of them were people coming back -- a key sign of renewed hope that jobs are out there.

Still, 9.9 percent is an awfully high unemployment rate, and that's with millions of Americans still considered outside the workforce. Among those excluded, the number of discouraged workers -- people who want work but weren't looking because they didn't believe jobs were available for them -- climbed to 1.2 million last month. That compares with just 740,000 discouraged workers in April 2008.

The tally of long-term unemployment, or those out of work for 27 weeks or more, also rose, to 6.7 million people, or nearly half of the jobless.

"This week's job numbers come as a relief to Americans who've found a job, but it offers, obviously, little comfort to those who are still out of work," Obama acknowledged.

That underlines the economic conundrum for the president and his fellow Democrats. The turnaround in the jobs market looks great, considering the economy was shedding some 750,000 jobs a month when Obama took office. But if American voters don't feel economically secure by November's midterm elections, such comparisons will matter little -- as Republicans well know.

"It's great to celebrate a number, but then it's also important to recognize that jobs are not being created in this economy the way they should, that a lot of people have given up on the one thing that this administration has been selling from the very beginning, and that's hope," Michael Steele, chairman of the Republican National Committee, said this morning on MSNBC.

But another economic fear may loom larger for the White House: that Thursday's tumult in financial markets is a sign that the global economic volatility of recent years isn't over.

The principal cause of the 1,000-point downward swing in the Dow Jones industrial average was still a mystery, but it came amid heightened fears of Europe-wide and possibly global contagion from the economic problems of Greece, Portugal and other countries on the Continent.

Saying he was "mindful of other economic factors that can emerge" and addressing what he called "the unusual market activity that took place yesterday on Wall Street," Obama said regulators are investigating what happened with an eye toward protecting investors.

The markets' lingering sensitivity could be seen in how investors momentarily gained confidence as the president spoke. The Dow was down nearly 200 points when Obama came to the Rose Garden podium, rallied to a deficit of just over 70 points as he spoke, and was down again at more than 160 points below its opening level in midafternoon trading.

The president also said that he discussed the financial developments in Europe with Chancellor Angela Merkel of Germany -- the most important economic player in the eurozone -- and that the two "agreed on the importance of a strong policy response by the affected countries and a strong financial response from the international community."

The economic problems in Europe are different from those in the U.S. in some important ways. The American economic recovery has shown several signs of being self-sustaining, while Europe's has faltered. More important, in the face of crisis, monetary and fiscal policy can be coordinated by the Federal Reserve and the Treasury Department in the U.S., while the European Central Bank and the different European Union member governments have often been at odds.

Yet there's plenty of evidence, from the cascading economic crises that have wreaked havoc on countries worldwide and on markets as recently as Thursday, that the two sides of the Atlantic are part of the same global economic puzzle.