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Election-year turmoil weighs heavily on hiring plans
Voters will be hearing a barrage of messages about the U.S. economy in the weeks leading up to the presidential election. Here's the good news: The candidates both believe that it's an important issue.
The bad news? That's about all they have agreed on, and their plans veer in many different directions when it comes to creating jobs, promoting business investment and improving our nation's fiscal health.
This is typical as we get closer to a presidential election, according to Gary Burtless, a senior fellow of economic studies at The Brookings Institution, a Washington, D.C.-based public policy think tank. In a
recent opinion piece, Burtless said that "alert voters everywhere realize the economy is neither as strong as claimed by the party in power nor the disaster described by the opposition."
And yet, political turmoil and election-year propaganda can be quite influential on the minds of those casting ballots. This environment can also weigh heavily on business owners and HR professionals. Many of them will delay expansion or hiring plans due to "political uncertainty," even though it can be argued that the
real root of tepid job growth is lack of demand for services or products.
Is it possible to tune out the noise between now and November 8? Perhaps not entirely. Political rhetoric aside, for most of us, the bottom line on our nation's economic well-being is "the rate of improvement in our family income" and how it is affected by changes in prices to consumer goods, Burtless said.
Recent federal data show that the country is heading in the right direction in that regard. Median weekly earnings of the nation's 111.2 million full-time wage and salary workers were $824 in the second quarter of 2016, not seasonally adjusted, according to
a report from the U.S. Bureau of Labor Statistics (BLS). This was 2.9 percent higher than a year earlier, compared with a gain of just 1.1 percent in the consumer price index over the same period.
Hiring has slowed in 2016, but the job creation machine is still chugging along. June 2016 marked the 69th straight month of employment growth, according to BLS data, and recent reports from the Society for Human Resource Management (SHRM) echo those results.
In August, hiring is predicted to remain nearly unchanged in the manufacturing sector and is expected to fall in the service sector compared with a year ago, but steady payroll growth will continue. Notably, more than two-fifths of manufacturers (46.7 percent) and one-third of service-sector employers (36.9 percent) expect to add jobs in August, according to
SHRM's Leading Indicators of National Employment (LINE) report.
The Federal Reserve,
in a statement released July 27, 2016, said that the labor market has strengthened and that economic activity has been expanding at a moderate rate. Inflation continues to run below the Fed's 2-percent target, and "near-term risks to the economic outlook have diminished."
Several sectors of the economy are holding up well, including services, health care and construction, said Michael Ryan, principal economist at the Washington, D.C., office of IHS Markit, a global economic consultancy. But others are not, including mining, manufacturing and utilities, and those poorly-performing industries will continue to drag on gross domestic product (GDP) as 2016 progresses, he said.
Some areas have been hit particularly hard by the downturn in the energy industry, including Midwestern states like Oklahoma, said Monty Evans, senior economist with the Oklahoma Employment Security Commission.
"By any economic measure, it appears that Oklahoma's economy entered into a recession in early 2015, pulled down as plunging commodity prices forced energy firms to slash their budgets and workforce," Evans said. "The energy sector is a principal driver of economic activity in Oklahoma and it has an outsized effect on the statewide economy."
Pullbacks in energy-sector companies have "rippled through other sectors" including manufacturing, professional and business services, and real estate, Evans said.
"Probably the hardest hit are the rural areas where oil and gas activity has provided a significant source of jobs and income," he said. "Many laid-off oil field workers are finding they have to accept jobs which pay far less than in the oil patch."
A preliminary estimate of GDP in the second quarter of 2016 showed that the economy only grew at a 1.2-percent pace during the April-to-June time frame, according to the U.S. Bureau of Economic Analysis. GDP has averaged a "mediocre" 2.1 percent since the country emerged from the Great Recession in 2009, and that could be a factor for some people when heading to the polls in November, Ryan said.
"This recovery has been especially weak in comparison to those in the past," Ryan said. "Voters are feeling that as we head into this election cycle."
Joseph Coombs is a senior analyst for workforce trends at SHRM.
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