Uptick in jobs gives Obama a happy sendoff
The U.S. economy last month unexpectedly produced the biggest burst of new jobs since last spring, raising hopes of stronger hiring ahead and giving a boost to President Obama as he embarked on a 10-day Asian trip that will focus on creating new opportunities for American workers.
Yet despite the addition of 151,000 new jobs in October, the nation’s unemployment rate remained stuck at 9.6% for the third month in a row. And, welcome as the new jobs were, they still suggested a long, pain-filled road ahead.
That underscores the challenge the president faces as he tries to rev up the sluggish economy and regain his political momentum after Tuesday’s Republican landslide in the midterm congressional elections.
Obama believes the key to prosperity for the U.S. is greater participation in the global economy, but he has yet to convince millions of Americans that his strategy will return them to financial security.
“You look at the public anxiety about globalization and outsourcing and jobs — they’re all connected,” said Thea Lee, policy director at the AFL-CIO in Washington. “That’s what we heard over and over when we knocked on thousands of doors during the political season.”
The economy needs to create about 7.5 million jobs to reach the pre-recession level, and it probably will have to do so with fiscal stimulus dollars running out and policy options sharply reduced after the GOP election sweep.
More than a year after the official end of the recession, the number of jobless workers in October remained at nearly 15 million, with more than 6 million unemployed for more than six months.
At the same time, Friday’s jobs report capped a week of generally positive economic news that suggested the recovery may be regaining some of the momentum lost in the spring. The decline of the construction industry showed signs of bottoming, manufacturing continued to expand and auto sales were stronger than expected.
Meanwhile, the Federal Reserve’s announcement Wednesday that it plans to buy an additional $600 billion in Treasury bonds to stimulate spending and investment also has added to hopes of a stronger recovery.
“I finally got a job. Last night I got my first pay deposit into my bank account,” Richard Punko said Friday, four weeks after landing a one-year contract job as a financial services consultant.
The 60-year-old Boston-area resident was laid off in late 2008 from his $130,000-a-year job as a senior performance consultant at State Street Bank. He said he had exhausted his unemployment benefits and “seriously depleted my retirement fund.
Before departing for India, the first stop on the Asia swing, Obama conceded that the jobless rate was “unacceptably high.” But he pointed out that the private sector has added jobs for 10 straight months, including more than 100,000 in each of the last four months.
With little chance of getting a newly Republican-controlled House to support major new spending programs, Obama is turning to overseas markets to try to create more jobs through exports.
“It’s also absolutely clear that one of the keys to creating jobs is to open markets to American goods made by American workers,” Obama said. “Our prosperity depends not just on consuming things, but also on being the maker of things.”
His Asia trip includes pursuing a free-trade agreement with South Korea and dealing with the contentious issue of China’s currency at the Group of 20 largest economies summit.
Much of the trip’s message will be crafted for Americans following the events from home. The White House is working on making statements and generating pictures and videos that stress the central mission for the next two years: Obama’s search for jobs.
In India, Obama will be accompanied by a large delegation of U.S. corporate executives.
The White House is hoping to have specific announcements about business deals consummated during the president’s travels, including the possible sale of as many as 10 Boeing C-17 military transport planes to the Indian government, a significant order for the Chicago company and for Southern California, where the C-17 is assembled.
From India, Obama will head to Indonesia, then to South Korea for the G-20 summit and to Japan for a meeting of the 21-member Asia-Pacific Economic Cooperation.
Obama will seek to build and solidify relations with an increasingly important region on a broad level, including security, but the main purpose is economic.
Manufacturing has been a key driver of the U.S. economic recovery this year. But after adding 170,000 jobs in the first seven months, manufacturers have cut 36,000 in the last three, including 7,000 positions in October.
Most of the 151,000 jobs created last month, as in prior recent months, have come from temporary-help firms, health and education services and restaurants — mostly lower-paying service positions.
Clyde Prestowitz, a former trade negotiator in the Reagan administration, doubts Obama can do a whole lot anytime soon to bolster American manufacturing and exports, since the U.S. economy is built around services and structured to support consumption as opposed to production.
In contrast, he said, countries in Asia and other export-focused nations such as Germany have strong industrial policies and incentives for domestic manufacturing and exports.
At the G-20 the president will push for currency revaluation and other policies so China and major U.S. trading partners export less and buy more American goods — a rebalancing of a global economy that Obama administration officials say that for too long has relied on American consumers.
But it will be tough to win agreement on concrete policies aimed at correcting imbalances. Germany, for example, is undertaking austerity measures that will constrain demand for goods, not boost it. Germany, along with China and big resource exporters such as Russia and Saudi Arabia, aren’t likely to support U.S. efforts to set curbs on trade surpluses.
“It leaves Obama in a tough spot because the one place where he can go to create jobs is to reduce the trade deficit,” said Prestowitz.
In Seoul next week Obama is expected to announce significant progress, if not a deal, on a free-trade agreement with South Korea.
Although the pact was negotiated during the Bush administration, it has been in limbo as key Democratic lawmakers demand more favorable terms.
With Republicans taking control of the House and having gained more seats in the Senate, Obama is likely to get greater support for the free-trade agreement in Congress, said Rep. Daniel Lipinski (D-Ill.).