Justin Wolfers of Brookings assesses the latest jobs numbers:
The most important news was the revisions to what we had previously thought was a healthy and perhaps self-sustaining recovery. Instead, jobs growth in July was revised from 162,000, to a weak 104,000, and June was also revised downward. Taken together, this month’s revisions means we’ve created 74,000 fewer jobs than previously believed. And the previous jobs report subtracted another 26,000 jobs through revisions. Moreover, for reasons that remain a mystery, revisions have tended to be pro-cyclical, meaning that the healthy recovery we thought we were having might have been expected to yield further upward revisions. All this means that analysts are hastily revising their views.
The other bad news comes from the household survey, where employment fell 115,000, leading the employment-to-population ratio to decline by 0.1 percentage points. So the decline in the unemployment rate isn’t due to folks getting jobs; instead, it’s due to people dropping out of the labor force.
Nonfarm payrolls increased 169,000 in August but only 95,000 including downward revisions to June/July. Very mediocre. However, average weekly hours ticked up and, as a result, total hours worked were up 0.4 percent in August. If the number of hours per worker were unchanged, a 0.4 percent gain in total hours would mean a 450,000 gain in payrolls. So we don’t think today’s report indicates a lack of demand for labor.
Though I’m not proud of it, my thoughts immediately turn to the political implications. Spending the next few months duking it over the debt limit and defunding Obamacare when Republicans could be pushing a new jobs agenda strikes me as a terrible idea.