Friday’s monthly jobs report from the Bureau of Labor Statistics could give President Donald Trump a critical piece of ammunition in his re-election campaign — or could put a second term out of reach.
The September jobs data, set for release on Friday at 8:30 a.m. ET, will be the last snapshot before Election Day of a battered labor market making a fitful recovery — a report that takes on outsized significance to the extent that voters view the report as a referendum on the Trump administration’s handling of the Covid-19 pandemic and the resulting economic fallout.
“I think this report being the last before the election means that it’s the closing argument for a president who has leaned heavily on the economy as a big talking point for the campaign,” said Daniel Zhao, senior economist at job search and review platform Glassdoor. “Obviously, the current crisis complicates the messaging around that.”
Economists say a meaningful deceleration will make it harder for Trump to claim economic victory just a few weeks before people head to the polls. Those surveyed by Dow Jones expect to see 800,000 new jobs added, and the unemployment rate to tick down to 8.2 percent.
“If it’s the president’s last month to demonstrate the voters should have confidence in him… it’s maybe not the greatest start to the month for him,” said Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute.
First-time weekly jobless claims on Thursday ticked down to 837,000, down from an upwardly revised 870,000 the week before. Payroll processor ADP announced Wednesday that the private sector added 749,000 jobs in September — also better than economists expected, but another clear indication that future improvement will be marginal rather then meteoric, said Tony Zabiegala, chief operations officer at Strategic Wealth Partners.
“We’re just adding fewer jobs and what we’re really starting to see is that there is a…plateauing, and we’re having a hard time finding organic reasons for jobs to continue to grow,” he said.
Regaining jobs is now a heavier lift because a growing number of temporary business closures are becoming permanent. “On a going forward basis, I think we’ll see that a lot of them have gone from temporary to permanent,” Zabiegala said.
In the contentious presidential debate on Tuesday night, former Vice President Joe Biden pushed back on Trump’s boasts of record job gains in recent months. “We handed him a booming economy. He blew it,” Biden said.
“The job market is still a shadow of what it was prior to the pandemic,” said Mark Zandi, chief economist at Moody’s Analytics. “The pace of growth is very modest, particularly given how far away the economy is from full employment.”
The president’s claims of record job gains are misleading, Zandi said, in that the positions recovered only represent about half of the 22 million jobs lost when the pandemic triggered wide-scale shutdowns in the spring. Economists say much of the initial rapid recovery reflected businesses reopening and employers bringing back laid off or furloughed workers, but those easy gains are fading.
“There are more permanent job losses now and we expect some additional ones in October. A lot of companies brought people back quickly after the reopening, expecting that activity would rebound in kind, but it didn’t,” Christopher said. “The demand is not there because of the worry about infections,” he said, adding that new disease clusters and restrictions on commercial activity are impeding business owners’ ability to bounce back to some semblance of pre-pandemic normalcy.
With an average of around 40,000 new cases of Covid-19 diagnosed every day, public health experts warn about the pandemic intensifying in the months ahead — an event that would make further labor market pain unavoidable. “We’re not sure exactly how the pandemic is going to evolve, and that can have a dramatic impact on the economy,” Zhao said.
Companies are less eager to hire, as well. Data from Glassdoor on September job openings — a forward-looking metric, as opposed to the government’s monthly report — show a virtual stall, with job increases going from 2 percent in August to a mere 0.4 percent in September.
“It is common for a recovery to proceed in fits and starts,” Zhao said. “A few weeks of soft data isn’t a red flag, necessarily, but obviously it is a concern when we still have a long way to go.”