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CNNMoney Survey: Economy Likely Added 120,000 Jobs in August

Thursday, 06 Sep 2012 08:35 AM

The economy probably added a net 120,000 jobs in August, a CNNMoney survey of economists finds.

The government will release its August jobs report on Friday.

In July, the economy picked up 163,000 jobs, but the unemployment rate increased to 8.3 percent. The economists polled expect the unemployment rate to remain unchanged in August.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Experts say 120,000 new jobs doesn’t bode well for President Barack Obama.

“The soft economic environment that we’re having is not going to be good for any incumbent,” said Sam Bullard, a senior economist at Wells Fargo, CNNMoney reported.

“It’s a tough sell for anyone in office.”

July’s figures were likely artificially high due to fewer summer layoffs at auto factories, while summertime hiring at bars and restaurants pumped up the numbers as well.

“The strength we saw in July is just not going to be able to hold up,” Bullard said.

Some 12.8 million Americans are unemployed, and sustained recovery will take time.

“‘There’s more work to do’ — that seems to be the mantra after every jobs report,” said Ellen Zentner, senior U.S. economist for Nomura, CNNMoney added.

“We’re still growing jobs, but it’s not enough. It never seems to be enough.”

The Federal Reserve will hold a two-day monetary policy meeting next week, and a weak jobs report could prompt the U.S. central bank to roll out a new round of bond purchases from banks, a stimulus tool known as quantitative easing (QE) that pumps liquidity into the financial system in a way that pushes down interest rates across the economy to spur recovery.

Some Fed officials have said the economy doesn’t need monetary stimulus right now, pointing out that under current economic trends, consumers want to save and pay down debts, while businesses want to ride out uncertainty surrounding the elections, fiscal imbalances due to arise next year, regulations and the European debt crisis, putting off investing in the process.

Policies that encourage investing and borrowing would fight that trend.

“So the consumer wants to save, doesn’t want to spend, businesses don’t want to invest because they’re facing uncertainty and both of those headwinds are not something that monetary policy can fix,” Federal Reserve Bank of Philadelphia President Charles Plosser told CNBC recently.

“Monetary policy does not create wealth. All we can do at best is try and rearrange it a little bit and even that’s hard to do, and under the circumstances we are facing now, it’s particularly difficult for monetary policy,” Plosser added.

“My current assessment both of the economy and the effectiveness of QE is that I don’t think it really beats the cost-benefit test right now.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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2012-35-06
Thursday, 06 Sep 2012 08:35 AM
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