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Why the U.S. Jobs Report Could Be Much Worse than Expected

The September U.S. jobs report, the second to last before Election 2012, is expected to show 110,000 jobs added for the month – but there's a chance it could be much uglier.

First, the weekly initial jobless claims out today (Thursday) increased 4,000 to 367,000 for the week ended Sept. 29. Never a good lead in to a jobs report.

Second, the ADP jobs report released Wednesday showed the private sector added 162,000 jobs in September, less than the 189,000 added in August. ADP's report is often skewed to the upside compared to the government's employment numbers.

Data shows that between April and August, ADP estimated nearly 50,000 more private sector jobs were added per month than the government report (widely viewed as more accurate).

But in August, ADP's number overshot the government's by a hefty 98,000.

Equally disturbing is that the number of jobs being added (according to government figures) is nowhere near what is considered healthy. Just to keep up with population growth, our economy needs to add at least 125,000 jobs every month.

At that pace, it would take at least four more years for the U.S. job market to fully recover from the Great Recession.

"We're not going anywhere quickly in the jobs market," Ryan Sweet, senior economist at Moody's Analytics, Inc., told Bloomberg News. "The job market is just more of the same. Layoffs aren't the big problem, it's the lack of hiring."

The number of jobs employers added in August was an uninspiring 96,000, a steep decline from July's 141,000.

And while the unemployment rate eked down to 8.1% from 8.3% the previous month, it was for all the wrong reasons.

Many discouraged Americans have given up looking for a job. Plus, more young adults are prolonging their education in attempts to avert entering a very difficult job market.

And with the following factors, 2013 looks to get even worse.

QE3 Won't Boost Jobs Reports

Dreary labor market conditions provoked the Federal Reserve to implement QE3 until it sees a substantial and sustained improvement in the job market.

Looking at the dismal job market picture, the new round of quantitative easing is bound to live up to its moniker: QE Forever.

But, despite Bernanke's claims, QE3 isn't the job market panacea.

If we fall off the fiscal cliff, the jobs market is tumbling with us and a QE3 safety net will fail to catch it.

A new study shows that the $1.2 trillion across-the-board budget cuts slated for Jan. 1 would cost the U.S. some 1 million jobs in 2013 if Congress fails to prevent the fiscal cliff.

The study from the Aerospace Industries Association (AIA) revealed that small businesses are apt to lose 956,181 jobs, or a whopping 45% of the total 2.14 million anticipated U.S. job losses, if the budget cuts come to fruition.

Scores of small business owners have relayed to the AIA that they may have to downsize and move into different business areas. Some may even be forced to shut down, the report detailed.

AIA President Marion Blakey said Fuller's new investigation highlights what she refers to as the idiocy of the budget crisis given that small businesses were seen as a crucial part of driving enriched economic growth in the U.S.

"The idea that we will be losing 956,000 jobs in the small business area is just a staggering effect of sequestration that people need to take into account," Blakey reiterated to Reuters.

The AIA this week conducted congressional visits by hundreds of business people from small businesses that are responsible for supplying components for the aerospace and defense industry. They found orders have already shrunk and the job cuts have already begun.

According to the U.S. Small Business Administration, small businesses employ nearly half of all private sector workers. In addition, they have produced 65% of the net new jobs over the last 17 years and were responsible for roughly one-third of U.S. exports.

Check out the September U.S. jobs report released at 8:30 a.m. Friday morning.

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