Tags: Pimco | El-Erian | Jobs | Obama

El-Erian: Weak Jobs Report Should Worry Obama, is 'Last Thing' US Needs

Friday, 06 April 2012 11:33 AM

Pimco CEO Mohamed El-Erian says the latest jobs report gives President Barack Obama plenty to worry about, which can seriously affect the conversation leading up to his bid for re-election.

"After a period of relative calm, Friday's employment report should again sound alarm bells in many parts of Washington," El-Erian writes in the Financial Times.

"The combined risk of an unemployment problem that is increasingly structural in nature and a rate that is bottoming out way too soon is bad news," he wrote.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

"It is the last thing America and, more broadly, the global economy need, especially at a time when Europe remains fragile."

"Having cut jobs and costs to the bone during the great recession, many companies found themselves understaffed for the business pickup they experienced over the last few months," says El-Erian, leaving them no choice but to play catch up in hiring.

"But, where they do have a choice — in hiring for expected future business — they lack conviction despite generally solid profitability and rock-solid balance sheets," El-Erian says. “The hesitancy is understandable, particularly given the uncertain outlook for demand.”

American consumers, as a group, still carry too much debt and have to cope with higher oil prices, El-Erian notes. And the prospects for exports, which have grown markedly, are gradually dimming now that the rest of the world is slowing.

"Meanwhile, policymakers have yet to find a way to deal properly with a year-end fiscal cliff, the result of Washington's repeated inability to design coherent fiscal policy," El-Erian says.

He adds that political bickering and dithering “may again deliver a depressingly familiar seasonal pattern that undermines the well-being of millions and renders the subsequent recovery even more difficult to secure.”

Friday, the government reported that employers pulled back sharply on hiring last month, a reminder that the U.S. economy may not be growing fast enough to sustain robust job growth. The unemployment rate dipped, but mostly because more Americans stopped looking for work.

The Labor Department said the economy added 120,000 jobs in March, down from more than 200,000 in each of the previous three months, the Associated Press reported.

The unemployment rate fell to 8.2 percent, the lowest since January 2009.

The rate dropped because fewer people searched for jobs. The official unemployment tally only includes those seeking work.

Meanwhile, Art Laffer, an economist and former adviser to President Ronald Reagan, says Obama's recent criticism of the Republican budget plan misses the mark.

"What Obama is missing is that government spending doesn't create jobs, it destroys jobs," Laffer told CNBC. "The tooth fairy doesn't work on the Treasury staff," he said.

“When you cut government spending, you get a boom in the economy,” says Laffer.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

© 2019 Newsmax Finance. All rights reserved.

1Like our page
Friday, 06 April 2012 11:33 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved