Lousy Jobs Data Means More Trouble for Obama

If it really is all about "the economy, stupid," some new jobs data may spell more trouble for President Obama and his re-election prospects. According to the Brookings Institution and the Labor Department, the size of the government workforce has been shrinking. That may be good news for those who think government needs to get smaller, but it's threatening an already wobbly economic recovery. Financial services firms are cutting back harder than they did a year ago. And while the overall employment picture has been improving, few Americans say they notice any difference.

A Brookings report shows just how important government jobs have been to local economies since 2007, when the recession began.

• Of the 20 metropolitan areas with the strongest economies, 17 gained government jobs. Of the 20 metropolitan areas with the worst economies, 14 lost government jobs.
• State and local government payrolls have been shrinking, according to a June Labor Department report. From May 2010 to May 2011, local governments cut 267,000 jobs. During that same time, state governments cut 24,000 jobs.
• In May, total local government employment was 14.165 million jobs. That's the lowest number since July 2006.

So far, most cuts have been in retail banking, where a sluggish economy and reduced demand for loans have taken their toll. But Challenger expects future cuts to come in investment and commercial banking, where regulatory changes and declines in trading volume are expected to cut into banks' long-term profitability.

There is one promising sign: In 88 of the largest metropolitan areas, Brookings found that employment numbers had bounced back from their recession low points. But only twelve of those regions gained back even half of the jobs they lost, and a Bloomberg poll shows that overall, Americans aren't noticing much improvement. Only a quarter of the respondents said they saw signs that the economy is improving, and two-thirds say they think the country is on the wrong track.

Still, Americans say they favor the President's vision for the country over that of the Republicans, albeit only by a three point margin.

Is the employment picture improving in your region? What's the best way to jump-start job growth?

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