As The Private Sector Adds Jobs, Budget Cuts Continue To Limit Economic Growth

October 07, 2011 10:15 am ET — Alan Pyke

The Bureau of Labor Statistics reports today that the private sector added 137,000 jobs in September, while the public-sector workforce shrunk by another 34,000. That's a continuation of a long trend, in which budget cuts lead to public employee layoffs that shrink the overall monthly job growth number. The chart below, updated with today's report, illustrates the steady contraction of the public sector and the expansion of the private economy since the Recovery Act actually began to reach the economy in early summer 2009. Since that time, the private sector has seen a net gain of 1.4 million jobs; if public-sector employment had just held steady, without any hiring or firing, the economy would have grown by about 2 million jobs over this period. Instead, budget cuts have eliminated 572,000 government workers on net. Click to enlarge:

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BLS also revised their July and August numbers upward by a total of 99,000 net jobs. Republicans touted the initial report of zero net change in employment in August as proof of President Obama's failure, and they have an opportunity to correct the record today: BLS now says the economy added 57,000 net jobs in that month.