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We begin this hour with the national jobs report which came in below expectations. The government's monthly survey found that 96,000 jobs were added in August, about 30,000 less than expected. The jobs report could present a speed bump for President Obama just after the Democratic convention. We'll talk about the numbers in a few minutes with the president's chief economist. First, here's NPR's John Ydstie with the details.
JOHN YDSTIE, BYLINE: Analysts had expected the economy would add about 125,000 jobs last month. It didn't happen. Mark Zandi, chief economist at Moody's Analytics, says that's largely because manufacturing lost 15,000 jobs in August.
MARK ZANDI: Manufacturing has been a source of job growth pretty consistently now for more than a couple of years. So that was the biggest disappointment and the biggest difference from the expectations that we all had about this number.
YDSTIE: Zandi says the slowdown in Europe is hurting U.S. manufacturers. He also says layoffs associated with the retooling of some U.S. auto plants contributed to the loss of jobs even though the U.S. auto sector has been doing very well.
Diane Swonk, chief economist at Mesirow Financial, says there's another possible reason for the hit to manufacturing jobs: the looming tax hikes and spending cuts scheduled for the end of the year, the so-called fiscal cliff.
DIANE SWONK: A large number of manufacturers who are actually doing fairly well come out and even say, we're delaying hiring because we're concerned about the fiscal cliff.
YDSTIE: Today's employment report did provide one number that at first glance appeared to be positive. It showed the unemployment rate dropping by two-tenths to 8.1 percent. But Mark Zandi says the rate fell for the wrong reasons.
ZANDI: We, of course, want to see the unemployment rate decline, but we want it to decline because we're creating jobs, and people that are unemployed are getting them. In the month of August, it was more that the people who didn't have jobs stepped out of the workforce.
YDSTIE: The weak employment report raises the odds that Federal Reserve policymakers will take some action next week to bolster the economy. But the Fed's remaining ammunition is not very powerful, and it's unlikely to boost the economy's growth rate very much.
There was a lot of commentary today suggesting that the weak jobs report is another hit to President Obama's bid for re-election. Mark Zandi says it's not likely to have a big impact. His firm, Moody's Analytics, has a model largely based on economic conditions that predicts the outcome of presidential elections.
ZANDI: If the economy is performing on Election Day in a way that's similar as it is performing today, then our model would say that the president will eke out a small victory.
YDSTIE: That's partly because the Moody's model predicts the election's outcome in the Electoral College, so it takes account of the economy state by state. And many of the swing state economies are doing better than the overall national economy.
Economist Douglas Hibbs Jr., formerly a professor at the University of Gothenberg in Sweden, agrees today's employment report will not be pivotal. But his model comes to a very different conclusion about the outcome of the election.
DR. DOUGLAS HIBBS JR.: The president is likely to lose the election with high probability because the economy has fared so poorly, and there's no sign of dramatic improvement on the near horizon.
YDSTIE: In Hibbs' model, the outcome of this election depends largely on the increase in per capita disposable income during President Obama's first term. That has lagged badly. While his model doesn't take into account the Electoral College, Hibbs argues that Obama's popular vote deficit will be too large to be transformed into an Electoral College victory. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.