This morning’s jobs report reveals that the better than expected July increase was nothing more than a blip. The economy has been slogging along at about the same pace since the spring. There is ample cause to believe that the truth is much worse than the 96,000 jobs created number might indicate. There is normally a large amount of seasonal firing this time of year, and employers probably fired fewer people than normal because they hired fewer earlier in the summer. This means that the normal seasonal adjustment process will overstate this August’s jobs growth, a view that is supported by the fact that the biggest source of strength was in eating and drinking establishments. Alternatively, it is possible that the labor market is so depressing that folks have taken to heavy drinking.
The unemployment rate dipped down, but this was a classic discouraged worker effect, and means nothing. There was a chance that this jobs number would reinforce the July’s promising blip and change the political climate in the president’s favor. That didn’t happen, which means that the economic story will stay about where it is between now and the election.
— Kevin A. Hassett is director of economic-policy studies at the American Enterprise Institute and serves as an economic adviser to the Romney campaign.