Yet Another Disappointing Jobs Report - Fed Action May Follow

Posted: Sep 07, 2012 8:37 AM
It's become a common refrain on Fridays when the Bureau of Labor Statistics releases the jobs report from the last month: it was a lackluster month for employment. Fewer than 100,000 new jobs were added yet the unemployment rate ticked down to 8.1% due to more Americans becoming discouraged and leaving the labor force.

Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.

The unemployment rate edged down in August to 8.1 percent. Since the beginning of this year, the rate has held in a narrow range of 8.1 to 8.3 percent. The number of unemployed persons, at 12.5 million, was little changed in August.

Among the major worker groups, the unemployment rates for adult men (7.6 percent), adult women (7.3 percent), teenagers (24.6 percent), whites (7.2 percent), blacks (14.1 percent), and Hispanics (10.2 percent) showed little or no change in August. The jobless rate for Asians was 5.9 percent (not seasonally adjusted), little changed from a year earlier.

Both the civilian labor force (154.6 million) and the labor force participation rate (63.5 percent) declined in August. The employment-population ratio, at 58.3 percent, was little changed.

The workforce participation rate is the lowest in 31 years. What's more, BLS revised the previous month's job growth downwards. This paints a picture of a sputtering economy still struggling to get going again at the end of Barack Obama's first term.

During Barack Obama's closing speech at the Democratic National Convention last night, he spent very little time talking about jobs programs and proposals, and very little time defending the jobs policies he'd passed during his first term. His stimulus bill was not popular at the time and, in light of a still-struggling economy, is widely viewed as a failure. The President spent about a sentence promoting his American Jobs Act, which received no traction and died quickly in Congress.

There's been speculation that a lackluster report like this might force the Federal Reserve to spring into action and bring a new round of monetary stimulus.

Analysts are predicting 130,000 new jobs, slightly below average for the year, with the jobless rate hanging at 8.3 percent. That would serve as confirmation that the economy has modest strength, but not enough to have a rapid and lasting impact on overall unemployment.

“Based on the tone of the minutes of the last Fed meeting, as well as Chairman Bernanke’s Jackson Hole speech, we sense that policymakers are inclined to do something to further ease monetary policy — but the employment data could influence specifically which measures are adopted,” said Joseph LaVorgna of Deutsche Bank.

“If there is a sharp negative surprise from the employment figures, say payrolls come in below 75,000 and the unemployment rate rises a couple of tenths, then the Fed would undertake QE (quantitative easing) in addition to our expected language changes,” LaVorgna said.

As Townhall's Guy Benson wrote, it's easy to get caught up in the horserace political implications of a jobs report like this, but what's important to remember is that this is real hardship that real people have to deal with.