America's Job-Creation Engine Remains Stalled
Overall, the economy lost 95,000 jobs in September after factoring in the loss of 159,000 government jobs, including 77,000 once-in-a-decade U.S. Census worker jobs. A Bloomberg survey had expected the economy to lose 8,000 jobs total in September but to add 85,000 private sector jobs, after a loss of about 130,000 Census and other government jobs.
The previous two months saw a revised, 15,000 increase in the number of jobs lost. August's total was revised to a loss of 57,000, slightly worse than the previously estimated 54,000. And July's number was revised considerably more, to a loss of 66,000 from 54,000.
Stuck at 9.6%
One unqualified bright spot in the September report: August's private sector job total was revised higher to a gain of 93,000, considerably better than the previously estimated 67,000 increase.
The unemployment rate remained the same in September at 9.6%, but that stat still puts the post-financial-crisis recession in the record books, and not in a good way. The U.S. unemployment rate has now equaled or exceed 9.5% for 14 consecutive months -- one month longer than the previous record during the 1982-1983 recession. This is the longest period of elevated unemployment since the U.S. Labor Department started keeping monthly records 1948.
September's job report -- the last one before November's congressional election -- probably will do little to change voter attitudes. Most voters have already made up their mind by now, and consistent with previous behavior, they're blaming the party in power in Washington for the nation's high unemployment rate. The Democrats are expected to lose about 40 seats in the House and about six to eight seats in the Senate, the former shifting control of the House to the Republican Party.
September's tread-water job report probably won't change the U.S. Federal Reserve's stance toward the economy. At its next meeting in November, after Election Day, the Fed is likely to implement the second phase of its quantitative easing -- the so-called QE2 -- to keep credit markets liquid and to help stimulate a U.S. economy that's growing too slowly.
U.S. GDP slowed from a 3.7% growth rate in the first quarter to 1.7% in the second quarter -- a rate that Fed Chairman Ben Bernanke has termed too low.
Bernanke isn't the only influential official to see the trouble with a tepid recovery. Northwestern University Economist Robert J. Gordon, a member of the National Bureau of Economic Research's (NBER) committee that determines the dates of business cycles, estimated that the U.S. economy needs annual GDP growth of 2.5% just to prevent the high 9.6% U.S. unemployment rate from rising, The New York Times (NYT) reported. So, the recession's end in June 2009 isn't good enough. The economy has to grow better than Gordon's 2.5% pace and add about 100,000 to 125,000 jobs per month -- or the unemployment rate will rise.
In September, the food services sector added 34,000 jobs, professional/business services added 28,000 -- with most of those being temporary jobs. Health care added 24,000 jobs, and mining added 6,000. The manufacturing, wholesale trade, retail, transportation, warehousing, information and financial activities sectors were little changed in the month, the Labor Department said.
On the downside, in addition to the loss of 159,000 government jobs -- including 77,000 Census workers and 76,000 local government jobs -- the construction sector lost 21,000 jobs.
September's report provided further evidence of a U.S. economic recovery in search of a turbocharger. So far, like the usual boosters -- housing and consumer spending -- don't have nearly the oomph that they did in past recoveries past.
All this underscores the importance of business executives and policymakers in Washington and in state capitols working together to find new engines of growth. That's literally the most important job for this country now.