February 24, 2020

Jobs Numbers for the Optimists, the Pessimists, and Everybody in Between

An even bigger loser in September was the retail industry, which lost 11,000 jobs — its eighth month in a row of contraction. That surely reflects its particular challenges, particularly a wave of bankruptcies and store closures. But it is worth watching in case retailers, through their hiring decisions, are sending a signal about their expectations for consumer spending.

Notably, 22,000 of the net new jobs in September were with the government — primarily state and local government employers. That suggests private sector job growth was even weaker than the headline numbers imply, also consistent with a global economic slowdown.

So where do all these competing signals leave us? Where does someone who is neither a president seeking re-election, a central banker seeking steadiness nor a stone-cold pessimist conclude that things stand?

The slowing wage growth paired with low unemployment is a genuine conundrum. It should make the Federal Reserve even more skeptical of the theoretical relationships between jobs, wages and inflation that have traditionally driven its policy choices.

In particular, the longer the United States carries on with sub-4 percent inflation with no negative consequences, the stronger the case for testing just how low things can go.

But the rest of these results are not particularly surprising, nor inconsistent with one another. Slower job growth is nothing to mourn if it takes place as the economy inches closer and closer to full employment. And that it is taking place with continued gains in the share of prime-age adults working means the job market is still going in the right direction, at least in terms of creating jobs.

There may yet be a more significant slowdown or even a recession in the months ahead, but the good news is that it certainly isn’t here yet.

Article source: https://www.nytimes.com/2019/10/04/upshot/jobs-numbers-for-the-optimists-the-pessimists-and-everybody-in-between.html?emc=rss&partner=rss

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