Photograph by Paul Sancya/AP Photo

Job seekers at a job fair in Southfield, Michigan.

The White House is taking today’s employment report as a sign that the economy is healing from “the wounds inflicted” by the worst downturn since the Great Depression, while warning Congress against creating any “self-inflicted wounds.”

Such as the looming sequestration that threatens defense and other discretionary spending — following a fourth-quarter 0.1 percent annualized decline in the gross domestic credit blamed on slowed defense spending at year’s end.

The U.S. economy added 157,000 jobs in January, the Labor Department reported today, following a revised gain of 196,000 in the prior month and 247,000 in November. The unemployment rate rose to 7.9 percent in January from 7.8 percent in December.

That holds the jobless rate below 8 percent, a benchmark reached two months before the presidential election, yet Alan Krueger, chairman of the Council of Economic Advisers, cautioned today that “more work remains to be done.”

“Today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. It is critical that we pursue the policies needed to build an economy that works for the middle class as we continue to dig our way out of the deep hole that was caused by the severe recession that began in December 2007.”

“Today’s report is a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy,” Krueger said in a statement released by the White House. “The administration continues to urge Congress to move toward a sustainable Federal budget in a responsible way that balances revenue and spending, and replaces the sequester, while making critical investments in the economy that promote growth and job creation and protect our most vulnerable citizens.”

The economy has added 6.1 million jobs over the past 35 straight months, he noted. In 2012, private businesses added 2.2 million jobs. Overall, an average of 181,000 jobs were added each month in 2012.

Original post is White House Warns of ‘Self-Inflicted’ Wounds for a Recovering Economy by Political Capital.

Photograph by Munir uz Zaman/AFP via Getty Images

U.S. Army soldiers attached to 2nd platoon, C troop, 1st Squadron (Airborne), 91st U.S Cavalry Regiment, 173rd Airborne Brigade Combat Team operating under NATO sponsored International Security Assistance Force (ISAF) looks through his rifle as a Medevac helicopter takes off during a patrol near Baraki Barak base in Logar Province on Oct. 13, 2012. T

Written with Richard Rubin

Just as the U.S. gross domestic product is taking a hit from lower defense budgets, federal spending cuts viewed as unthinkable a few months ago — $1.2 trillion falling heavily on the Pentagon — are seen as likely to happen starting March 1.

What’s known as budget sequestration, designed to be so draconian that it would push Democrats and Republicans to compromise on taxes and spending, has hardened the parties’ positions. If the cuts occur, they would require $600 billion in across-the-board military spending reductions over a decade that Defense Secretary Leon Panetta called “devastating.”

House Republican leaders, weakened by Obama’s re-election and Democratic gains in the House and Senate, are resigned to accepting the cuts rather than risking a deal with Obama that would mean higher taxes. Democrats see little political benefit in accepting Republican offers to forestall the reductions in exchange for cuts to entitlement programs such as Medicare.

“I want to make sure we save that money,” said Senator Lamar Alexander, a Tennessee Republican. “I’m not going to vote to change it unless we replace it.”

Alan Krueger, chairman of Obama’s Council of Economic Advisers, said the decline in GDP underscores the need for legislation that does away with the automatic spending cuts “to avoid self-inflicted wounds to the economy.”

Congress must “move toward a sustainable federal budget in a responsible way that balances revenue and spending, and replaces the sequester, while making critical investments in the economy that promote growth and job creation and protect our most vulnerable citizens,” Krueger said in an e-mailed statement.

Today’s economic report may not change the underlying political standoff that has prevented Congress from avoiding sequestration.

See the full report on defense cuts and the GDP at Bloomberg.com.

Original post is Defense Cuts: Unavoidable, Despite GDP Contraction Pinned on Defense? by Political Capital.

Photograph by David Paul Morris/Bloomberg

A job seeker, right, speaks with a recruiter during a HIREvent job fair in San Jose, California.

The White House is taking today’s jobs report — with unemployment declining to 7.7 percent in November — as another sign of the imperative for approving the tax plan the president is pressing in deficit talks.

Alan Krueger, chairman of the Council of Economic Advisers, today hailed the Labor Department’s report of 146,000 jobs added last month as “further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. ”

What’s downplayed in this statement is the reservation heard in previous statements, before the president’s re-election, which were careful to hedge any celebration over improving numbers with the warning that more work remains to be done. The rate slid to 7.9 percent before President Barack Obama’s re-election Nov. 6. Today’s report is the best number since December 2008.

And Krueger is using the numbers to underscore the urgency of averting the automatic tax increases slated to take effect Jan. 1 if Congress fails to act. The White House and congressional leaders are negotiating a deficit-cutting deal aimed at averting that — with the president insisting on tax relief for 98 percent of Americans and higher tax-rates for top earners, and House Speaker John Boehner holding out for new revenue by limiting some tax exemptions.

“President Obama has proposed, and the Senate has passed, an extension of middle class income tax cuts that would prevent the typical middle class family from facing a $2,200 tax increase at the beginning of next year,” Krueger said in a statement released by the White House today. “In addition, the president has proposed a plan that will enable responsible homeowners to refinance their mortgage and take advantage of today’s historically low interest rates.”

“The economy has now added private sector jobs for 33 straight months, and a total of 5.6 million jobs have been added during that period, taking account of the preliminary benchmark revision,” he said. “Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged.”

He saved the caveat for last:

“As the administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”

Original post is Krueger: Jobs Report a Reminder — Middle-Class Tax Relief Essential by Political Capital.

Photograph by Victor J. Blue/Bloomberg

Workers build a wing tip for a C-5 cargo plane at the CPI Aerostructures Inc. manufacturing facility in Edgewood, New York.

Updated at 10:45 am EDT

Gross domestic product up.

Unemployment down.

Housing starts up.

Consumer confidence up.

With one more federal report on employment to come the Friday before Election Day, Nov. 6.

All told, a series of indicators on the eve of the 2012 presidential election, a contest virtually tied in national polling and hotly contested in the handful of swing states that will determine the outcome, is favoring the president.

Republican challenger Mitt Romney will campaign in the most pivotal of all states today — Ohio — with an economic message. Romney’s response to the most recent trends has been that things — including unemployment dipping to 7.8 percent at last report, the lowest since Obama took office following the worst recession since the Great Depression — would have been a lot better without President Barack Obama’s insistence on the policies he pursued, such as passage of the health care act which Romney calls a jobs-killer.

Alan Krueger,  chairman of the Council of Economic Advisers, issued this statement from the White House:

“Today’s report shows that the economy posted its thirteenth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.0 percent annual rate in the third quarter of this year, according to the “advance” estimate released by the Bureau of Economic Analysis.  Over the last thirteen quarters, the economy has expanded by 7.2 percent overall, and the private components of GDP have grown by 10.1 percent. While we have more work to do, together with other economic indicators, this report provides further evidence that the economy is moving in the right direction.

The economy expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction, as Bloomberg’s Shobhana Chandra reports today.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures show.

And a housing rebound is helping mend Americans’ finances and confidence, indicating the pickup in demand for expensive items such as automobiles can be sustained, Chandra reports, adding: The data is likely to play a role in the upcoming election, allowing Obama to say the economy is heading in the right direction, while challenger Romney argues the growth is not fast enough.

“The household side is doing better, that comes through pretty clearly,” says Dean Maki, chief U.S. economist in New York for Barclays Plc, who correctly forecast the rate of growth. “Housing, which was in a deep hole, is also expanding. The fact that both of these are improving is an encouraging sign.”

Original post is Economic Indicators at Election Eve — White House: `Right Direction’ by Political Capital.

Photograph by John Moore/Getty Images

Job applicants meet potential employers at the NYC Startup Job Fair held in New York City.

Updated again at 11:35 am EDT

Direct mailings to voters in Virginia are calling three-and-a-half years of unemployment over 8 percent “a hammer blow to America’s middle-class families. ”

It is part of Republican Mitt Romney’s persisting message: Voters have a choice of his plans “for a stronger middle class” — promoting energy independence, cutting the deficit and more — versus President Barack Obama’s society in which “government creates jobs, not people.” Those are the words in the Virginia Republican Party’s mailings this week.

Today, for the first time in 44 months, the unemployment rate has fallen to 7.8 percent.

A 43-month streak of 8-percent-plus unemployment, the longest stretch since the federal government started keeping records in 1948, has ended one month before the presidential election — with just one additional monthly Labor Department report scheduled on the Friday before the Nov. 6 vote.

“This morning we found out that the unemployment rate has fallen to its lowest level since I took office,” Obama said today at a campaign rally in Virginia. “Today’s news is certainly not an excuse to try to talk down the economy to score a few political points. It’s a reminder that this economy has come too far to turn back now.”

Still, the Romney campaign moved quickly this morning to find a lead lining in the report:

“This is not what a real recovery looks like,” Romney said in a statement issued by his campaign. “We created fewer jobs in September than in August, and fewer jobs in August than in July, and we’ve lost over 600,000 manufacturing jobs since President Obama took office. ”

Before a campaign rally in Abingdon, Virginia, today at a machinery company that sells equipment to the coal-mining industry, Romney was stopping at Alpha Natural Resources, headquartered in nearby Bristol, which recently announced 1,200 layoffs and several mine closings that Republicans have blamed on Obama and the Environmental Protection Agency.

The Obama administration took the new number as both progress and a reminder of the challenge ahead.

“While there is more work that remains to be done, ” Alan Krueger, chairman of the Council of Economic Advisers at the White House, “today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. It is critical that we continue the policies that are building an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007.

The report from Labor this morning of 114,000 jobs created in September — and the unemployment rate falling from 8.1 percent to 7.8 percent — undermines an argument the Republican presidential nominee is making about the president’s policies not working. Obama, acknowledging that the recovery from the worst recession since the Great Depression is slow, maintains that he has provided a needed stimulus and is urging Congress to embrace additional job-building measures.

The rate reported today is the lowest since January 2009, when Obama took office.

“Symbolically that’s important,” said Alan Abramowitz, a political scientist at Emory University in Atlanta, interviewed before the release of the jobs data by Bloomberg’s Mike Dorning. “Romney’s been talking about it’s been over 8 percent so many months. Well, now it’s not.”
The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington.

Improving employment prospects that lead to stronger wage growth provide workers with the wherewithal to boost their spending, helping cushion the economy from a global slowdown, as Bloomberg’s Alex Kowalski reports today.

“The labor market is slowly regaining footing,” Eric Green, global head of rates and foreign-exchange research at TD Securities Inc. in New York, said before the report. “The Federal Reserve wants to see traction, faster growth.”

Both Obama and Romney are campaigning today in Virginia, one of the few swing states in which the presidential contest is being most heavily contested. Obama won Virginia in 2008, the first time the state went Democratic since 1964. It has been 62 years since Democrats won two consecutive presidential elections in Virginia — with Harry S. Truman’s election in1948,  the year the government started counting joblessness.

Romney offered a preview of the tack he’ll take on the road today.

“If not for all the people who have simply dropped out of the labor force, the real unemployment rate would be closer to 11 percent,” Romney said in his issued statement. “The results of President Obama’s failed policies are staggering – 23 million Americans struggling for work, nearly one in six living in poverty and 47 million people dependent on food stamps to feed themselves and their families. The choice in this election is clear.

“Under President Obama, we’ll get another four years like the last four years,” Romney said. “If I’m elected, we will have a real recovery with pro-growth policies that will create 12 million new jobs and rising incomes for everyone.”

Original post is 7.8% Jobless: Obama Campaign Gift by Political Capital.

Photograph by Sam Hodgson/Bloomberg

Job seekers in El Cajon, California.

Forty-three is the number of consecutive months in which the U.S. unemployment rate has been above 8 percent. The unemployment rate fell to 8.1 percent in August from 8.3 percent in July.

Thirty is the number of consecutive months in which U.S. private-sector payrolls rose, including a gain of 103,000 in August.

Republicans are brandishing the first number and Democrats the second as they seek to gain a political advantage on the economy and jobs, the issues that voters rank as their top concerns ahead of the Nov. 6 election.

Unemployment above 8 percent“for 43 straight months” shows that President Barack Obama “has not fulfilled his promises,” Republican presidential nominee Mitt Romney said Sept. 8 in Virginia Beach, Virginia.

“The economy has now added private sector jobs for 30 straight months, for a total of 4.6 million jobs during that period,” Alan Krueger, the chairman of President Barack Obama’s council of economic advisers, wrote on the White House’s blog Sept. 7.

Original post is Bloomberg by the Numbers: 43 and 30 by Political Capital.

Photograph by Joe Raedle/Getty Images

A ''Now Hiring'' sign is seen in a store front window in Miami Beach, Florida.

Correction: In the 8th paragraph, the estimated number of new jobs added to the economy is 130,000 in the month of August, not 110,000.

Before President Barack Obama speaks tonight, he will likely receive a memo that could predict the success of his Charlotte convention.

It will be written by Alan Krueger, but Obama might wish that his Council of Economic Advisers could just cut ‘n paste some older memos (and older numbers), written by Martin Feldstein, President Ronald Reagan’s CEA chair when he faced re-election.

Consider this first sentence from a short, sunny, memo, dated July 5, 1984. “Tomorrow’s news about unemployment is spectacular: another 0.4 percent decline bringing the overall unemployment rate to 7.0 percent in June.”

While Krueger has been the bearer of mediocre economic news all summer, Feldstein was running out of superlatives to describe job growth. From April (“very good news”) to May (“remarkably good”) to June (“spectacular”) the Feldstein memos provide an internal look at how Reagan’s senior advisers were viewing an economy on the march. And Feldstein’s glee at the improving data.

“This is the first time since the Kennedy Administration that a presidential term has seen a fall in both unemployment and inflation,” concludes his three-sentence July memo.

Those Thursday night economic numbers led to a Friday morning president eager to take credit. The next day in San Antonio, Texas, Reagan started his speech to the Texas Bar Association by noting, “Just in case that you haven’t caught the news early this morning,” and then ran through the numbers.

Sometimes Reagan’s public statements about the numbers were longer than the memos themselves.

While the Feldstein memos come from a different era (all are typewritten, include two spaces after a period, and some note that they are “by dictation”) the data sets are the same as today’s: both include the raw numbers from the Household and Establishment surveys. That gives us the unemployment rate, stuck at 8.3 percent, and the number of new jobs added to the economy, estimated to be 130,00 in the month of August.

Through the election year, Obama’s jobs numbers have been a fraction of Reagan’s. For example, the 379,000 new positions that were added in June of 1984 were six times the 64,000 created in June 2012. Reagan’s worst month of 275,000 (March) is the same as Obama’s best (January).

What we won’t learn until the Obama archives open is just how technical and objective the memos from Krueger (and his two predecessors) are by comparison.

At times, Feldstein can’t contain his excitement. “I am writing this memo from Paris where I have been attending the OECD meetings,” he closes his May 3, 1984 note. “Our employment improvement is the envy of Europe.”

The next month he played communications director. “The news is remarkably good and will be a very timely addition to the message that you will bring to London,” he wrote May 31.

Even though Obama will “probably” receive the memo before he delivers his acceptance speech tonight, Obama is unlikely to betray anything about them, said Austan Goolsbee, Obama’s last CEA chair.

“My experience is that the president is extremely good at not tipping his hand about what’s in the numbers,” he said in a Bloomberg TV interview yesterday. “So anybody who’s going to be looking at his speech trying to figure out what’s in them, I would say is probably going to be disappointed.”

Michael Callahan contributed to this post

Original post is What a Jobs Report Memo to a President Looks like by Political Capital.

Photograph by Scott Eells/Bloomberg

A job seeker speaks with an employer at the Veterans On Wall Street job fair in New York.

Updated at 9:25 am and 9:45 am EDT

The monthly gain in jobs in July has nearly doubled the past two months’ anemic reports — and nearly tripled the revised gain for June.

Yet the unemployment rate has inched up again, to 8.3 percent.

President Barack Obama, at the White House today, will hail the 42nd consecutive month of job growth — and a noteworthy monthly gain, in comparison with the past two months. June’s weak gain has been revised downward today to 64,000.

Republican Mitt Romney, campaigning in Las Vegas today, will focus on that jobless rate — over 8 percent heading into an election, and, for now, rising.

(Update:

Last month, Romney called June’s jobs report “a kick in the gut.”

Today, in a statement issued by the candidate on his way to Las Vegas, he called the July report “a hammer blow.”

“Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” Romney said in the statement issued by his campaign. “We’ve now gone 42 consecutive months with the unemployment rate above eight percent. Middle class Americans deserve better, and I believe America can do better.”)

(Second update:

Alan Krueger,  chairman of the White House’s Council of Economic Advisers, issued his own statement today.

The administration’s take-away:

“While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.  It is critical that we continue the policies that build an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007.”)

Today’s monthly unemployment report from the Department of Labor provides Romney a fresh chance to highlight discontent over the economy even as  Obama pre- empted him with a swing-state ad campaign attacking the challenger’s tax plan, Bloomberg’s Mike Dorning reports.

The jobs report probably won’t sway many voters, says Dan Schnur, a campaign adviser to Republican presidential candidate John McCain’s first bid for the White House.

“Voters already know what they think about the economy,” says Schnur, director of the Unruh Institute of Politics at the University of Southern California in Los Angeles. “What’s left is for them to decide who can do something to make it better.”

Original post is Jobs Added: 163,000 — Unemployment Rate Rises: 8.3 pct by Political Capital.

Photograph by Justin Lane/EPA

A job fair at a state office building in Brooklyn, New York.

For a jump on the nation’s monthly unemployment and payroll figures, watch who walks a brown envelope from the Eisenhower Executive Office Building to the West Wing tonight.

Caveat: You probably can’t get a good view, because you don’t have a press pass (they are red) and construction has made West Executive, the street that divides the EEOB and the West Wing, look like the Erie Canal during the Monroe administration. So maybe rent a south-facing room at the Hay Adams hotel in the winter when the leaves have fallen and glass West Exec with some field binoculars.

Hint: The chairman of the Council of Economic Advisers tends to deliver good news in person.

What follows is a timeline of how the two numbers in the monthly jobs report — with July’s report coming Friday morning — get gathered and then disseminated in the administration. It’s based on close to a dozen conversations with current and former administration officials. [See a video report at the end of this post.]

The unemployment rate that everyone assumes will determine Obama’s residence next year starts with 2,000 Census workers knocking on 60,000 doors, asking an uncomfortable question: Did you work last week?

Not everyone likes to participate, but Census field reps give themselves about 10 days to gather the data for what’s known as the household survey.

After knock-backs and call-backs, our friendly Census workers weight the data to adjust for non-answers. Then they transmit the data to the Bureau of Labor Statistics to determine the jobless rate.

For the business survey — sometimes called the establishment survey or the non-farm payroll report — the BLS doesn’t need all those eager Census workers knocking on your door. They simply send a questionnaire to 486,000 work sites. (In many cases it’s all on-line and with big businesses, it’s fairly automated). BLS wants to know how many jobs were on these payrolls on the 12th of the month.

On the Thursday afternoon before jobs day (which remember doesn’t have to be the first Friday of the month, but usually is), the BLS transmits both data sets to the Council of Economic Advisers, over what some call the bat phone. A secured system.

CEA then shares the numbers with Treasury economists and the Federal Reserve. This makes sense: If the jobs report showed that the economy was about to implode and yields on U.S. debt might look like Spanish ones, the Fed should probably have a bead on the data. Ditto Treasury.

Thursday afternoon, inside CEA, it’s tense. And secretive: No emailing the number — only hard copies.

Staff economists (not political appointees) help the chairman, currently Alan Krueger, draft a one-page data memo (sometimes one-and-a-half pages) to the president. Each chair has a slightly different style. Some make edits. Others argue over the data, but it’s the CEA who gets to frame up the numbers for the president.

When the memo is drafted Thursday evening (and you can imagine that Obama really wants to know that number), it’s decision time for the CEA chairman. Send a staffer from the EEOB to the president’s staff secretary with the memo, or deliver it in person? Call the chief of staff or the president’s scheduler and see if the president has a few minutes? He will make the time.

When he was chair and the number beat expectations, Austan Goolsbee got the ultimate Obama approval: a presidential fist bump. With his first chair, Christina Romer, Obama got even more personal when she made the point of delivering the good news in person.

On a December evening in 2009 (Dec. 3, to be precise) it would have been easy to watch Romer walk from the EEOB to the West Wing to deliver the then-good news that the economy only lost 11,000 jobs.

The next day, at Lehigh Carbon Community College in Erie, Pennsylvania, Obama shared his reaction. “I’ve got to admit my chief economist, Christy Romer, she got about four hugs when she handed us the report,” Obama said.

Thursday night, copies of the memo also go to the vice president’s office (he also has a staff secretary) and the National Economic Council. (It’s a separate post, but there’s inherent tension between the NEC and the CEA and this is one case where the CEA has a bit of a tactical advantage. The chair knows the number first and knows it better. At this point, the chair has been studying the data for a couple of hours.)

That brings to six (the Fed’s Ben Bernanke, Treasury’s Timothy Geithner, NEC’s Gene Sperling, Vice President Joe Biden, President Barack Obama and CEA’s Alan Krueger) the number of principals who know the unemployment rate.

There are a couple of ironies here: The OMB director, the keeper of all budget numbers, doesn’t get this one.

And the White House chief of  staff, who typically knows everything, doesn’t get the memo. (How do you think Rahm Emanuel felt about that?)

Once you have the number, there’s very little for a White House (or Treasury) official to do with it, other than prepare your arguments for the next economic meeting.

But the point is, you know.

Others don’t.

Original post is Fist-Bump or Moment of Silence — How the Jobs News is Delivered by Political Capital.

Photograph by David Goldman/AP Photo

A customer at a Lowe's store in Atlanta.

That was the annual rate increase in the U.S. gross domestic product in this year’s second quarter, according to Commerce Department statistics released today. The increase was smaller than the revised 2 percent gain in the previous quarter.

Surrogates for President Barack Obama and Republican challenger Mitt Romney responded to the report quickly. The report was “quite disappointing,” Glenn Hubbard, a top economic adviser to Romney, said on a conference call.

“At that pattern, the economy simply will never return to full employment,” he said.

Alan B. Krueger,  chairman of Obama’s Council of Economic Advisers, said on the White House blog that the economy posted its 12^th straight quarter of growth and “additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007.”

The White House supports a bill, passed by the Democratic-run Senate this week, which would extend through 2013 the Bush-era tax cuts for individual income up to $200,000 a year and income of married couples up to $250,000. Republicans who control the House of Representatives want to extend the cuts for all taxpayers regardless of income level.

Here’s a look at some Bloomberg stories about the election and the economy:

ANEMIC RECOVERY: “We have an anemic recovery with really no momentum,” Julia Coronado, chief economist for North America at BNP Paribas in New York, told Shobhana Chandra for a story analyzing the GDP report.

POST-GDP FORECAST: Following today’s report release, an election prediction model by Emory University political scientist Alan Abramowitz projects Obama will get 50.5 percent of the popular vote and has a two-thirds probability of winning the Nov. 6 election, Mike Dorning writes.

HORSE TAXES: The Olympics open today in London, where a horse part-owned by Romney’s wife Ann is competing in dressage. Richard Rubin looks at the tax consequences of the Romneys’ investment in the horse business.

Original post is Bloomberg by the Numbers: 1.5 by Political Capital.