U.S. added 163,000 jobs in July; unemployment rate ticks up to 8.3 percent

The United States added 163,000 jobs in July but the monthly unemployment rate nonetheless inched up to 8.3, a contradictory pair of figures that illustrate the muddled state of the economy.

Friday’s job report shows that payrolls have been growing steadily for nearly two years, an average of roughly 150,000 jobs per month. But that pace is meager compared with the millions of jobs lost during the deep recession that began in late 2007.

Amid the confusion, a critical question animates the presidential race: Is the steady job growth a sign of a reasonably strong recovery given the circumstances, or a sign of terrible economic weakness?

Compared with the job recovery after the previous two recessions, the job growth today is just about what might be expected. It was tepid after both the downturns of 2001 and 1990.

However, those two recessions were relatively shallow, and not nearly as deep as the economic drop that began in December 2007. The climb back from those recessions, as a result, was less imposing.

When the current jobs recovery is compared with what followed the most recent deep recession, that of 1981-1982, the job growth these days does indeed look very weak. For the two years after that recession ended, average job growth rose about 280,000 jobs per month.

“It’s not the slowest of recoveries,” said Gary Burtless, an economist at the Brookings Institution. “It’s just the slowest recovery when we’ve had such a deep recession.”

Shortly after the release of Friday’s jobs numbers, President Obama framed it his way, noting that while millions of jobs have been added over the past 29 months, many more were needed because of the severity of the ’07 collapse.

“We knew when I started that it will take some time,” Obama said. “We had not had to come back from a recession this deep or painful since the 1930s, but we also knew if we were persistent and keep the right attitude, then we’ll gradually get to where we need to be.”

Romney, by contrast, issued a statement calling the small uptick in the unemployment rate in Friday’s report “a hammer blow” to middle class families.

“Middle class Americans deserve better, and I believe America can do better,” Romney said. “We’ve now gone 42 consecutive months with the unemployment rate above eight percent.”

Friday’s jobs report provided both good and bad news, and talking points for each campaign.

Payrolls expanded by 163,000 people, a promising rise after three straight months of disappointing job gains. Private-sector jobs rose by 172,000. Jobs in manufacturing rose by 25,000; there were 9,000 fewer jobs in government. Wall Street welcomed the news, with the Standard & Poor’s 500-stock index, a broad measure of stocks, jumping nearly 2 percent.

But as Romney emphasized, the rate of unemployment for July nevertheless rose from 8.2 percent to 8.3 percent.

It was a small enough difference in the rate that the Labor Department called it “essentially unchanged,” but more Americans are looking for work.

More people left the labor force, too, either retiring or giving up the search for work. Of those people remaining in the labor force, a slightly larger portion are unable to find work — hence the uptick in the unemployment rate.

The massive loss of jobs during the recession relative to the monthly job gains is a key concern for economists on both sides.

Heidi Shierholz, an economist at the left-leaning Economic Policy Institute, has calculated that the “jobs deficit” from before the recession is 9.7 million. At the current average pace of job growth, she said, it would take 10 years for the United States to return to full employment. Even if the rate of job growth were 350,000 a month, the job recovery would take three years, she said.

“Either way, it’s going to be a slog,” she said. “It’s just the hellacious recession that preceded this recovery that makes it look so bad.”

While economists on both sides of the political divide have drawn historical comparisons to make their points, many of them also caution that no two recessions are alike and no comparison is perfect.

While the most recent recessions were shallow, the deeper recession of 1981-1982 is different in other ways. Interest rates were higher and so more easily manipulated by the Federal Reserve; the rate of productivity growth was lower, meaning more workers were needed to expand production; baby boomers were still flooding the workforce, while now they are exiting, economists said.

“The debate is unresolvable,” said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank, and the former director of the Congressional Budget Office. “We don’t have a lot of data points. We only have about a dozen recessions where we have a lot of data.”

David Fahrenthold and David Nakamura contributed to this story.

Peter Whoriskey is a staff writer for The Washington Post handling investigations of financial and economic topics. You can email him at peter.whoriskey@washpost.com.
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