Jobs Preview: “On the Edge of Barely Acceptable”

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A trio of reports Thursday -- ADP payrolls, weekly jobless claims and a downward revision to first-quarter GDP -- reinforced a perception the U.S. economy has slowed considerably since early 2012.

Taken together, the reports simultaneously raised the stakes and lowered expectations for Friday's already crucial government jobs report.

The consensus is the May BLS report will show 150,000 non-farm payrolls and an unemployment rate unchanged at 8.1%. But the 'whisper number' is for something closer to 125,000 jobs following the weak ADP report.

While far from a perfect indicator, the ADP report is a good "guide" for the direction of the government jobs report, writes Dan Greenhaus, chief global strategist at BTIG. "Today's ADP report absolutely reinforces the idea that for whatever reason, employment growth has decelerated of late."

Diane Swonk, chief economist at Mesirow Financial agrees and says "the risk is high that the labor market will remain weak over the summer months as uncertainty over Europe and our own 'fiscal cliff' build."

If Swonk is right, that's rally bad news for the economy, consumers and the nearly 23 million Americans who are out of work or 'under-employed'; and it's horrible news for President Obama.

In the accompanying video, I preview the jobs report with Mike Santoli, senior editor for Barron's and author of the 'Streetwise' column.

"We're on the edge of barely acceptable job growth," Santoli says. "Whatever really comes out in the wide rage of expectations [for payrolls] is not going to disturb the narrative of 'slow growth at unsatisfying levels.'"

Contrary to popular belief, Santoli does not believe that necessarily guarantees a victory for GOP challenger Mitt Romney in November.

However unsatisfying, he notes the trend in hiring has been positive for the last year, one reason consumer spending has held up relatively well.

Furthermore, President George W. Bush won reelection in 2004 while job growth in the trailing 12 months was running around the same lackluster pace as today. Of course, "the absolutely level of unemployment was so much lower then," Santoli says, citing one more reason why it really is different this time.

Update: I spoke with Tony Fratto, who was Deputy Assistant to the President and Principal Deputy Press Secretary during President Bush's second term, about the relationship between jobs and political elections.

Generally speaking, the rule of thumb for political campaigns is most voters will have made up their minds about the state of the economy by mid-summer, says Fratto, currently a partner at Hamilton Place Strategies. In part that's because vacations and back-to-school planning often dominate August and September, respectfully, he says.

While there's no hard evidence to prove the thesis -- or any real statistical relationship between unemployment data and election results -- what's true is "there's only so many days left between now and the election," he says. "We are getting late in the cycle for the White House to be able to tell the story it wants to tell [that] 'even if we haven't returned to really strong levels of growth we are headed strongly in the right direction.'"

Fratto stressed the word 'strongly' (hence the italics) and, whatever your political bent, it's fair to say the most recent data are not indicative of an economy that's growing 'strongly'.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com