Ahead of the Sept. 2 release of the August jobs report, surveys had indicated the economy had added anywhere from 75,000 to 100,000 jobs that month. But those estimates turned out to be very wrong. Just minutes ahead of the release, CNBC’s Rick Santelli went out on a limb predicting that no jobs had been added in August.
Santelli was right about that number. As CNBC reported just minutes later, not a single job was added overall to the payroll numbers and the unemployment rate stayed at 9.1 percent. The previous two months were revised downward to show an additional 58,000 jobs lost.
It was the first time since February 1945 that the report showed exactly zero net jobs.
The predictions of the economists interviewed by CNBC that morning ranged from 25,000 to 60,000 and CNBC’s own Steve Liesman predicted 70,000. All of those guesses turned out to be overly optimistic.
The timing of the bad news on the jobs front comes less than a week ahead of President Obama’s big jobs speech, and as Republicans campaign against him and each other around the country. That’s something neither Obama, nor some Republicans were expecting.
As Ben Smith wrote for Politico on Sept. 2, “With today’s dismal jobs report confirming that the political landscape will likely be shaped by a sense of economic crisis, it’s easy to forget how recently the leaders of both parties were expecting a recovery.”
Even Mitt Romney, as of Sept. 2010, expected the economy to “be coming back,” Smith reported. “This isn’t the campaign either Obama or most Republicans expect to run, and if they seem caught off guard, it’s because they were,” Smith concluded.
Perhaps it is because politicians have been accepting too much of what the media tell them about the economy. Even after the dismal Sept. 2 report, CNBC guest Mark Zandi, Moody’s Analytics chief economist, said: “It’s obviously very dark, and we’re very close to recession, but that doesn’t mean we’re going to go into recession. And the reason is, for a recession to occur businesses have to lay off workers and I don’t think that’s what’s going on here. Businesses aren’t laying off workers, they’ve stopped hiring.”
So Zandi suggested it was still possible to avoid recession. But it would appear the public does not agree, since consumer confidence took a nosedive in August to a two-year low according to the Aug. 31 Investor’s Business Daily. IBD reported that confidence dropped 14.7 points to 44.5.