Mike & Co. —
Welcome to the weekend.
A couple of unexpected and unwelcome economic and debt developments marred the end of the week. Below is a look at this morning’s labor statistics report for September.
Unless anyone has other ideas, Monday’s update will explore the impact of Treasury’s announcement late this week that the operational deadline for a statutory increase to the national debt limit is November 5 — close to a month before previous expectations.
The September jobs report’s headline figure — unemployment held steady at 5.1 for the month; job growth — belied other, more disquieting data. The DC conventional wisdom was, bad enough to give the Federal Reserve second thoughts about raising interest rates any time soon, might hurt Democrats’ chances in 2016.
It wasn’t Boehner-scale seismic in DC, but the underlying economic facts of the report may be as consequential in the medium run. A quick look at the report’s data points recommended here yesterday is a good way to survey the sorry scene:
Workforce Size — the size of the nation’s workforce slipped to 62.4 percent of the population, the lowest level since 1977; presumably demographic changes such as the retirement of baby boomers and an increase in the time spent in school have driven much of the decline.
Wage Growth — stuck at about 2 percent for several years. September was no different: average hourly earnings dipped by a penny to $25.09 and are up 2.2 percent from a year ago. That means that despite the recovery in the job market, it hasn’t translated into bigger paychecks.
Industry — the jobs numbers are consistent with another report, from the Institute of Supply Management released earlier this week that suggested United States manufacturing slowed to a standstill in September.
Many analysts pointed at China’s faster-than-anticipated slowdown which has sent commodity prices plunging Anf roiled developing markets such as Brazil that rely on exports to China to spur growth at home.
So far, the U.S. economy had proven relatively resilient, on track to grow at an annual rate of about 1.7 percent in the most recent quarter. But today’s report suggests the United States may not be completely immune from global trends. Christine Lagarde, managing director of the IMF, said this week that the agency plans to lower its expectations for global economic performance through next year.
The report does not simplify the job of Janet Yellen, who had focused on each of the above factors specifically in trying to determine when the economy had enough lift off the runway and it is wheels up time for the zero-interest rate policy, the Fed’s main recovery booster.