The American economy isn’t in a recession (yet). But it certainly isn’t firing on all cylinders. The latest evidence of this pervasive middling? A September jobs report that missed expectations and featured weakening wage growth.
According to data released on Friday by the U.S. Bureau of Labor Statistics (BLS), the economy created only 136,000 new jobs in September – falling short of the 145,000 new jobs expected and clocking in below the upwardly revised 168,000 print from August and the upwardly revised 166,000 print from July.
Here are the trend lines …
(Click to view)
(Via: Zero Hedge)
Even more troubling for the economy, wage growth weakened – expanding by only 2.9 percent year-over-year compared to the 3.2 percent forecast (and the 3.2 percent registered in August). That is the weakest wage growth since July of 2018.
The widely watched (but economically insignificant) unemployment rate dipped by 0.2 percent to 3.5 percent – its lowest level since 1969.
Meanwhile the far more significant labor participation rate remained unchanged at 63.2 percent.
U.S. president Donald Trump – who is facing impeachment in Washington, D.C. – chose to focus on the unemployment rate.
Trump backers took the same approach, arguing the September report proved recessionary fears were overstated.
“Almost 1 million more people are employed in the past two months in the household survey, with the unemployment rate now at a 50-year low at 3.5 percent, debunking the political and financial punditry who played Chicken Little just two months ago crying, recession, recession, recession,” said Rick Manning, president of Americans for Limited Government. “With more people employed in America than at any time in history, and fewer unemployed at any time since the year 2000, it is no wonder that the Democrats are searching the globe for reasons to stop Donald Trump’s presidency, because America’s economy is strong and they can’t run on issues that affect the well-being of the average American.”
Another positive note for Trump? Weak wage growth increases the likelihood that the secretive Federal Reserve bank will cut interest rates for the third time in four months at its meeting later this month.
Trump has argued for months that the Fed raised rates too fast and too often during the first two years of his presidency, needlessly cooling the economy’s growth.
In response to cooling growth, the Fed cut rates in July for the first time in over a decade and made another modest cut last month.
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