Job losses turn up heat on Obama

Pressure mounting from all sides as economic drag continues

By Robert Schroeder

WASHINGTON (MarketWatch) -- A little more than a week ago, President Barack Obama said it was "pretty clear" that unemployment would exceed 10%. Unfortunately for him, he's getting closer to being right.

Thursday's worse-than-expected jobs report turned up the heat on the still-popular president to put more Americans back to work. Unemployment hit a 26-year high of 9.5% in June, the Labor Department reported, and nonfarm payrolls shrank by 467,000, much higher than anticipated.

The numbers had Republicans salivating, left Democrats disappointed, and fueled the debate about whether a second stimulus -- or something else -- is needed to help.

Reuters

Obama recently said "not yet" when asked if a second stimulus was necessary.

"I think it's important to see how the economy evolves and how effective the first stimulus is," he said on June 23.

But nine days and one bad jobs report later, one of his top economic advisers wasn't quite so dismissive.

"We'll do whatever it takes," said Council of Economic Advisers chair Christina Romer in an interview on CNBC on Thursday after the jobs report came out.

To be sure, Obama has said the same thing. On Thursday he called the jobs report "sobering news" but said he's confident the economy will recover in the short term and prosper in the long term. He added it'll take "more than a few months" to turn the economy around.

But the jobs report clearly takes the action up a notch, and the president is facing pressure from both sides of the aisle. With his popularity slipping since the inauguration -- standing at 59.2% in the latest RealClearPolitics average from a high of 63.3% -- it's pressure he can ill afford.

"It would be important to do more to generate jobs," says Lawrence Mishel, president of the progressive Economic Policy Institute. "Unfortunately for the administration, the trajectory of the economy has been far worse than they projected in November," he said.

AFL-CIO President John Sweeney said Thursday that the White House and Congress need to keep focused on stimulus to end the recession.

But more action doesn't necessarily mean more stimulus, says Mishel. And on that, some on the right agree.

"Democrats demanded nearly a trillion dollars in so-called economic stimulus spending with a promise that jobs would be created, unemployment would stop rising, and the effects would be immediate," said Rep. John Kline of Minnesota, the top Republican on the House Education and Labor Committee. "Nearly five months later, it's time to ask: Where are the jobs?" Kline said in a statement on Thursday.

Indeed, Obama hasn't seen a month of job gains yet. Since he took office at the end of January, total job losses number 2.6 million.

The fiscal climate couldn't get much tougher for Obama, especially since he wants to fund an expensive health-care overhaul without adding to the deficit. The White House could speed up the stimulus, try to enact another one or simply wait for the current one to show more results.

Romer said Thursday that "we're in for some more job losses" before things get better. Rep. Carolyn Maloney, the New York Democrat who chairs the Joint Economic Committee, agreed Thursday that it will be a long road to recovery, but was optimistic that the stimulus will work.

"The stimulus investments getting underway across the country will create jobs and stem losses," said Maloney in a statement.

Maloney may be correct. But many others are unlikely to be as patient -- and equally unlikely to forgive Obama for being right when the time comes.

Robert Schroeder is a reporter for MarketWatch in Washington.