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- EconoMonitor : Ed Dolans Econ Blog » US Unemployment Edges Down to 7.3 Percent, a New Low for Recovery
This is why we believe the Fed should not begin to taper.
The U.S. unemployment rate edged down from 7.39 percent in July to 7.28 percent in August, according to data released today by the Bureau of Labor Statistics. The decrease did not, however, reflect an across-the-board strengthening of the labor market. According to the BLS household survey, the civilian labor force, the number of unemployed, and the number of employed all decreased slightly for the month, both before and after seasonal adjustment. The labor force participation rate and the employment-population ratio also decreased on the month.
The BLS also publishes data on a broader measure of unemployment and underemployment known as U-6. That measure takes into account people who are working part-time but would prefer full-time work, and so-called marginally attached workers. The latter include people who have not looked for work because they think none is available and people who would like a job and are available for work, but who did not look for work in the previous four weeks because of study, family responsibilities, or other reasons. Both involuntary part-time workers and marginally attached workers decreased for the month, bringing U-6 to 13.7 percent. As the next chart shows, that also was a new low for the recovery. According to the separate survey of business establishments, the number of payroll jobs grew by 169,000 during August. The establishment survey excludes farm workers and the self-employed, does not correct for workers holding two jobs, and differs in other details of methodology. It is not unusual for the household employment data and the payroll jobs data to point in opposite directions. Previously reported payroll jobs gains for June and July were revised downward by a total of 74,000 for the two months. As the next chart shows, the August job growth was slightly below the average of 184,000 per month of the preceding year. Most of the new payroll jobs were in the service sector, with retail trade, professional and business services, and healthcare showing some of the strongest gains. Manufacturing showed a small increase in jobs while construction was flat. Government employment gained, largely on growth of local government education. Federal government employment was unchanged. Not too much can be read into any one month’s jobs numbers. The surveys on which they are based are subject to sampling error and later revisions. Considering these caveats, the August employment situation is consistent with pattern of the past two years—slow but steady growth with a considerable distance to go before the economy reaches anything that we could reasonably describe as “full employment.”
- EconoMonitor : EconoMonitor » U.S. Jobs Disappoint, Spurring Jitters About Tapering
This is heavier editorializing than our usual; but, it’s a very important issue, and we really don’t want the Fed to make a mistake here and taper way too soon.
As expected, all the negativity about bonds was premature. We must get the economy really going before we worry about inflation. The economy isn’t yet really going. It’s barely just started recovering. It could lapse back again were the Fed to taper too soon or too much or both. What’s the rush?
We’d rather overshoot inflation some than undershoot the recovery or see another dip/recession.
News that the US only created 169k jobs and the last two-months were 74k weaker than previously disclosed has some observers thinking twice about whether the Fed will taper at the FOMC meeting later this month. The dollar has come off and the US Treasury yields have fallen, which is helping to trigger a global bond market rally. The unemployment rate slipped to 7.3%, though again this reflects a decline in the participation rate (63.2% from 63.4%).
Getting people back to work is proving more difficult than the Fed thought, probably because the Fed has been operating under assumptions that no longer apply to our lower-wage, service-sector economy.
It would also be wise for the government to offer incentives to employers to hire people as full-time, permanent employees.
Read the source article … https://www.economonitor.com/blog/2013/0 9/us-jobs-disappoint-spurring-jitters-ab out-tapering/