Economists on Weak U.S. Job Growth


Before we get to a collection of quotes, allow me these questions:

1) How significant is the unemployment rate? (consider what it actually measures — not what it falsely implies);

2) Is the economic slow down an aberrational blip, or something worse? (I honestly don’t know)

3) How many hacks make actual reference to the Payroll versus Household Survey?

Here’s the online WSJ’s overview:

Economists dug into the U.S. report that showed only 32,000 jobs were added to nonfarm payrolls in July — while the jobless rate edged down to 5.5% — and mulled the implications. Does a second straight month of weak job growth mean the economic recovery has stalled? Will it affect the Federal Reserve’s decision next week on interest rates?

* * *
“This soft July report poses a real problem for the market. … Assertions, our own included, that June’s disappointment was an aberration are clearly more difficult to defend in light of July’s massive shortfall.”
Daragh Maher, economist, ING Financial Markets

* * *
“There’s little doubt now that the economy is struggling.” The July jobs report “suggests loud and clear that the soft patch continues.”
— Douglas Porter, senior economist, Nesbitt Burns

* * *
“We do not think that this report marks a weakening in the economy. One interpretation of these data, which would be consistent with the ISM reports, is that productivity growth is fueling the acceleration in economic activity in July. However, it is difficult to put too much weight on the employment data when there is a divergence of almost 600,000 between the two measures of job creation in July.”
John Ryding, chief market economist, Bear Stearns

* * *
“The true rate of job growth is probably somewhere between the two” — the numbers shown by the household survey and those shown by the establishment survey.” The increase in average hourly earnings coupled means the paltry payroll growth “masked an increase in demand for labor services. … It’s the growth of weekly earnings … which might allow consumer spending to grow despite July’s stalling of payrolls.”
John Lonski, economist, Moody’s Investors Service

* * *
In the wake of the July jobs report, the “forecast for a rate hike is much less convincing,” but the Federal Reserve is “more likely to feel compelled to follow up on the first rate increase. … However, the certainty of continued measured rate hikes will be replaced by a pause. We assumed a pause due to elections, but now a pause is more fundamentally driven.”
Stephen Gallagher, chief U.S. economist, SG Corporate & Investment Banking

* * *
“Despite lengthening, the workweek remains very short, reflecting the nervousness among companies to firmly commit to expanding their businesses. Hourly earnings are slowly accelerating … but have lagged behind the acceleration in consumer inflation. Longer hours and faster real earnings gains are needed to sustain consumer spending and economic growth.”
Steven Wood, chief economist, Insight Economics

Not too bad — only one econo-hack who appears to play the intellectually dishonest game. . .

Economists Mull Implications Of Weak U.S. Job Growth
WSJ Wrap Up, August 6, 2004 1:05 p.m.,,SB109180120697085008,00.html

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  1. spencer commented on Aug 8

    Let me suggest another line of thought.
    We are seeing a very sharp slowdown in productivity growth mostly in nonmanufacturing– if 2nd Q RGDP is about 4% means 2nd Q productivity would be under 2% as it has been for prior two quarters. Consequently, firms are holding up on hiring to try to regain productivity needed to sustain earnings.
    This seems very consistent with ISM nonmanufacturing report that service sector
    employment plunged in July and the employment report where the unexpected weakness was in services not manufacturing.

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