As bad as today's payroll report is, I have to say I'm really not that surprised. As much as stock markets have had a great June and were able to bounce off of the slightest whiff of good news out of Europe, economies aren't nearly as fickle. To say things have improved (or aren't worsening) in Europe is a far cry from the commitment and confidence that is needed to actually increase the headcount at your business.
As they say at NASA: "Houston, we have a problem." Right now the U.S. economy is in a very dangerous spot.
"80,000 jobs isn't enough to keep up with population growth," says Keith Hall, a senior research fellow at the Mercatus Center at George Mason University and the former Chief Economist for the White House Council of Economic Advisers. By his math, 130,000 jobs need to be created each month just to maintain. "Even at a quarter million, that's making progress. But it's going to take years and years and years to get back those (13 million) lost jobs," Hall says in the attached video.
If you're looking for something positive in the June report, it could simply be said that things didn't get worse. The three-month average, after the latest round of revisions to April and May, is just 75,000 a month for the second quarter. The headline unemployment rate also stayed steady at 8.2%—although everybody knows this is a poor indicator that underestimates reality by almost a 50% margin.
The other silver lining to this downtrend, one that investors will surely look to trade off of, is the increased probability that the Fed will be scared enough now to deliver another round of stimulus or QE3 (even though they just extended their Operation Twist bond exchange program for another six months). But as Hall points out, in terms of policy tools that can be implemented to get companies hiring again, "I'm not sure there's much else that can be done right now. I think the best thing you can do now is create some certainty—give some good signals as to what's going to happen with taxes and regulation."