Sept 7 - The glum August jobs report splashes cold water on President Obama's post-convention bounce and pours on the heat for the Federal Reserve to take action next week. Carmen Roberts reports.
The disappointing jobs report is raising questions about the Federal Reserve's next step and pouring cold water on President Obama's hope for a bounce from the Democratic National Convention. Job growth slowed sharply in August with the U.S. economy adding only 96,000 jobs, below the 150,000 needed to hold unemployment steady. The jobless rate fell to 8.1 percent from 8.3 percent - but only because many Americans gave up looking for jobs. Economists are split over whether the data are enough to push the Fed to take action Thursday and announce another round of monetary stimulus. Goldman Sachs economists raised the odds of a September 13 announcement to more than 50 percent. But others say the Fed would be better to hold off in case the economy gets worse. Markus Schomer, Chief Economist, PineBridge Investments is in that camp. SOUNDBITE: MARKUS SCHOMER, CHIEF ECONOMIST, PINEBRIDGE INVESTMENTS, (ENGLISH) SAYING: "It makes much more sense for the Fed to step in once the lawmakers in Congress have solved the fiscal cliff problem. Remove the uncertainty and then add a monetary policy stimulus on top of that. That will provide much, much more stimulus to the recovery." SOUNDBITE: CARMEN ROBERTS, REUTERS REPORTER (ENGLISH) SAYING: "The U.S. economy may fall off a fiscal cliff, because tax increases and spending cuts will go into effect in 2013 unless Congress takes action." The jobs report has President Obama on the defensive as the election enters the crucial final two months, but it won't likely change the outcome according to David Birdsell, Professor of Political Communications at Baruch College. SOUNDBITE: DAVID BIRDSELL, PROFESSOR OF POLITICAL COMMUNICATIONS, BARUCH COLLEGE (ENGLISH) SAYING: "It allows the Romney team to continue to hammer on disappointing performance. It occludes Obama's effort to change the narrative and talk about other things, such as the issues he was hitting on in his acceptance speech in Charlotte, and it fails to provide confidence that this is indeed the right policy." With two more reports to go before the November election, President Obama may still have time to win over undecided voters. Carmen Roberts, Reuters.