Economists had fairly low expectations from today’s jobs report from the Bureau of Labor Statistics — but the US economy managed to miss even those weak goals. The US added only 156,000 jobs in September and the U-3 unemployment rate ticked upward to 5%, as economists predicted 176,000 for last month. The miss, and the recent pattern of stagnant reports on jobs and economic growth, sets the stage for the next presidential debate on Sunday night:
Total nonfarm payroll employment increased by 156,000 in September, and the unemployment rate was little changed at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in professional and business services and in health care.
The unemployment rate, at 5.0 percent, and the number of unemployed persons, at 7.9 million, changed little in September. Both measures have shown little movement, on net, since August of last year. (See table A-1.)
Bear in mind, as always, that US population growth means that a certain number of jobs have to be added each month just to keep up. The US adds more than 2.5 million people a year, which means that we’d have to add 131,000 jobs a month just to maintain the near-40-year-low civilian workforce participation rate of 62.9%. At the June 2009 participation rate of 64.7% — which is when the Great Recession ended, and well after Barack Obama’s stimulus plan went into effect — that number would be closer to 135,000. At a healthier 66.7%, roughly where it was during the peak of the George W. Bush administration, it would be almost 140,000. Those are the minimums to keep up with population growth.
Now, look at the added jobs over the last two years as graphed by BLS:
Clearly we are not adding many jobs in relation to population growth, nor have we done so during the entirety of the post-recession period under Obama. Since the June 2009 end of the Great Recession, we have added 13.727 million jobs over 87 months, an average of … 157,782 jobs a month. It’s barely keeping up with population growth, which is why so many Americans remain sidelined and marginalized. That’s why the U-6 measures have only come down incrementally as well as why so many Americans remain out of the workforce altogether.
Other measures remain largely unchanged from last month. The U-6 measure of unemployment remained at 9.7%. However, the short-term unemployed jumped upward by 248,000, dwarfing the job gains for September. Post-report revisions for the last two months lowered their combined estimates by 7,000 jobs. Almost all of the changes were minimal, however, a word that also describes the effective job growth last month and for the last seven-plus years.
That sets up an interesting battle for Sunday night’s debate. Tim Kaine tried to play the “greatest job creation ever” card in the vice-presidential debate on Tuesday, but Donald Trump should have the financial acumen to dissect that argument — assuming he prepares for it. Hillary Clinton has to run as the continuity candidate to Barack Obama’s policies, especially on the economy, as Democrats have long made the brilliance of Obama’s recovery an article of faith. Trump will be helped by the fact that manufacturing has lost jobs three of the last four months, and is still two million jobs down from 2006 levels despite the recovery. If Trump can demonstrate a detailed grasp of policy and a clear temperament on what changes need to be made, that may be enough to get the attention of voters.
Meanwhile, Reuters breaks out the U-word again. Jason Lange also notes that this will make it tough for the Fed to raise rates:
U.S. employment growth unexpectedly slowed for the third straight month in September, which could make the Federal Reserve more cautious about raising interest rates.
Nonfarm payrolls rose 156,000, down from a revised gain of 167,000 jobs in August, the Labor Department said on Friday.
Economists polled by Reuters had expected employers to add 175,000 jobs last month.
How “unexpected” is a miss of 20,000? It’s not as if economists expected a 300,000 figure from the BLS; it’s just marginally more stagnant than their original estimate.