Pre-election economy: Unemployment falls, but hiring slows

WASHINGTON (AP) – The final jobs report before Election Day a month from now showed hiring slowed in September even as the United States (US) unemployment rate fell to 7.9 per cent – a mixed result for United States (US) President Donald Trump, who has staked his reelection in part on the economy.

The Labour Department said on Friday that employers added just 661,000 jobs last month amid the coronavirus outbreak, down from 1.5 million in August and 1.8 million in July.

Unemployment fell from 8.4 per cent in August, but that mainly reflected a decline in the number of people seeking work, rather than a surge in hiring. The government doesn’t count people as unemployed if they aren’t actively looking for a job.

“There seems to be a worrisome loss of momentum,” said Drew Matus, an economist at MetLife Investment Management. “There’s a lot of caution on the part of employers.”

With September’s hiring gain, the economy has now recovered slightly more than half the 22 million jobs wiped out by the coronavirus, which has killed over 200,000 Americans and infected more than seven million.

With many businesses and customers plagued by fear and uncertainty, some economists said it could take as long as late 2023 for the job market to fully recover.

A woman walks past a hiring sign while entering a Target store in Westwood, Mass. PHOTO: AP

This week, moreover, brought a new wave of layoff announcements reflecting the continuing slump in travel and tourism: Disney is cutting 28,000 jobs, Allstate will shed 3,800, and US airlines said as many as 40,000 employees are losing their jobs this month as federal aid to the industry expires.

In another problematic sign in Friday’s report, the number of laid-off workers who said their jobs are gone for good rose from 3.4 million to 3.8 million.

While unemployment has tumbled from April, when it topped out at 14.7 per cent, it is still high by historical standards.

For the Trump administration, the pandemic recession has been a whiplash, with unemployment soaring from a half-century low in February of 3.5 per cent to a 90-year peak in April of 14.7 per cent.

The US gained nearly seven million jobs from Trump’s 2017 inauguration until the pandemic struck. Now it has 3.9 million fewer than when he took office.

Friday’s numbers offered voters a final look at the most important barometre of the economy before the November 3 presidential election – an election whose outcome was thrown into deeper uncertainty by the announcement Friday that Trump has tested positive for the coronavirus.

Still-high unemployment is a potential political liability for Trump. Yet President Barack Obama was re-elected in 2012 even with unemployment at 7.8 per cent on the eve of the election.

And even as the economy has struggled to sustain a recovery, it has remained one of the few bright spots in Trump’s otherwise weak political standing.

Roughly half of voters approve of his performance on the economy.

Voters in some battleground states may feel differently. In August, the latest data available, unemployment was 10.3 per cent in Pennsylvania and 8.7 per cent in Michigan, both above the national rate that month.

Florida was at 7.4 per cent and Wisconsin at 6.2 per cent, with both states below the national average.

The economy is under pressure on a number of fronts, including the expiration of federal aid programmes that had fuelled rehiring and sustained the economy – from a USD600-a-week benefit for the unemployed to USD500 billion in forgivable short-term loans to small businesses.

The September jobs report showed that women in their prime working years are quitting their jobs and leaving the workforce at much higher rates than men, a sign that many women are staying home to help their children with remote schooling.