Austan Goolsbee, the chairman of Obama's Council of Economic Advisors, conceded that the numbers were bad and mapped out some preliminary next steps on the White House blog:
The unemployment rate remains unacceptably high and faster growth is needed to replace the jobs lost in the downturn. Today’s report underscores the need for bipartisan action to help the private sector and the economy grow--such as measures to extend the payroll tax cut, pass the pending free trade agreements, and create an infrastructure bank to help put Americans back to work. It also underscores the need for a balanced approach to deficit reduction that instills confidence and allows us to live within our means without shortchanging future growth.
Paul Krugman reacted quickly on his New York Times blog, explaining:
My bottom line on the inflation-deflation issue has always been to look at wages; you can’t have a wage-price spiral if wages ain’t spiraling. And they aren’t, to say the least.
It’s important to realize, by the way, that stagnant wages are NOT good for recovery; all they do is ensure that the burden of debt relative to income remains high, keeping demand and employment down.
The situation cries out for aggressively expansionary monetary and fiscal policy. Instead, however, all the political push is in the opposite direction.
Ezra Klein warned on Twitter, "The job numbers should change the debt ceiling debate. Economy needs more support now, austerity should wait. They won't." Klein expanded on those thoughts at his Washington Post blog:
We’re not recovering. We’re backsliding.
And Washington is making it worse. The Federal Reserve has ended its underpowered QE2 program and has no plans to replace it with QE3. Congress has is ending a variety of stimulus programs and shows every intention of either moving immediately to austerity, or nearly defaulting on the national debt and then, after causing economic chaos, moving immediately to some form of austerity. So the two institutions capable of helping the economy lift itself up are, instead, pressuring it to stay down.
We could do more. We should do more. But Congress won’t do anything more. The labor market, initially rocked by a financial crisis, is now stagnating because of a political one.
Steve Schaefer at Forbes offers a sneak preview of the market reaction:
The stunning lack of improvement in June’s report – April’s payrolls figure was revised to 217,000 from 232,000 and May’s cut by more than half to 25,000 from 54,000 – rocked Wall Street Friday morning, as index futures sharply reversed after indicating small opening gains earlier. The Dow Jones industrial average, S&P 500 and Nasdaq were all signaling a red start to the trading session after solid gains Thursday.
This article is from the archive of our partner The Wire.