Today's job report wasn't a grand slam though it wasn't a disaster either. There is a glass half full story and a glass half empty story. The top line number of 169,000 jobs created in August isn't terrible but isn't spectacular either and meanwhile the job numbers for June and July were revised down-significantly.
The U.S. economy is producing jobs at a still-subpar pace — a trend the Federal Reserve will weigh in deciding this month whether to slow its bond buying and, if so, by how much.
The U.S. economy is producing jobs at a still-subpar pace — a trend the Federal Reserve will weigh in deciding this month whether to slow its bond buying and, if so, by how much.
Employers added 169,000 jobs in August but many fewer in June and July than previously thought, the Labor Department said Friday. Combined, June, July and August amounted to the weakest three-month stretch of job growth in a year.
The unemployment rate dropped to 7.3 percent, the lowest in nearly five years. But it fell because more Americans stopped looking for work and were no longer counted as unemployed. The proportion of Americans working or looking for work reached its lowest point in 35 years.
So if you want the half full narrative you have the drop to 7.3% unemployment and the 169,000 jobs created. Scott Sumner considers good news a clear-cut defeat of something he calls 'Keynesianism' as some that how good news disproves there's a fiscal multiplier while validating his Sumner Critique. He's taken this argument so far lately he even argues Obama wants Summers for Fed Chairman to slow the economy and save the fiscal multiplier.
Because after all the voters care a lot less about creating jobs than the debate over monetary offset. If we don't have terrible numbers this year is Sumner claiming this is because of austerity? If not then what's his point?
While August's number is decent-of course subject to change-the drop in July's numbers were very steep.
"The revised job growth for June and July shrank the previously estimated gain for those months by a combined 74,000. July’s gain is now estimated at 104,000 — the fewest in more than a year and down from the previous estimate of 162,000. June’s was revised to 172,000 from 188,000."
The good news is that the unemployment rate is down to 7.3%, however, as has often been the case during this slow recovery, much of the drop is attributed to the unemployed getting discouraged and dropping out of the job market.
Much of the market reaction is seen as being about expectations of what the Fed will do in a meeting late this month. Today's mixed numbers can make the 'To taper' and the 'Not to taper' argument:
The jobs picture is sure to weigh heavily when the Fed meets Sept. 17-18 to discuss whether to scale back its $85 billion a month in Treasury and mortgage bond purchases. Those purchases have helped keep home-loan and other borrowing rates ultra-low to try to encourage consumers and businesses to borrow and spend more.
Friday’s report “is a mixed bag that can be used to support an immediate tapering of the Fed’s monthly asset purchases or delaying that move until later this year,” said Paul Ashworth, an economist at Capital Economics, said.
As long as corp;orations export jobs to other countries and lay off American workers while making record profits, job creation will be weak.
ReplyDeleteWhat I advocate in my blog is that companies that are exporting jobs offshore instead of hiring Americans pay a higher income tax rate that companies that are expanding operations here in the United States.
Thanks Hamilton I checked out your website and it looks very interesting. I certainly always want to hear about new ideas on how to create jobs.
ReplyDeleteIn fact I see that you have a new book about your job creation tax plan. That's right up my alley I got to read that.
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