The economy gained 130,000 jobs in August while the unemployment rate stayed at 3.7%, the Bureau of Labor Statistics reported Friday, a result that will do little to dispel worries that commerce is slowing.
The monthly employment report fell short of forecasters’ expectations for roughly 163,000 new payroll jobs. The job gains, furthermore, were inflated by the hiring of 25,000 temporary workers to prepare for the 2020 Census. The private sector added only 96,000 employees to payrolls.
The resilient labor market, nine-plus years into the jobs recovery has so far proved the greatest reassurance that the economy is holding up, even amid declines in indices for manufacturing and consumer sentiment and fears generated by President Trump’s trade war. Over the past three months, taking into consideration downward revisions to the past two months, job growth has averaged 156,000 — well over the mark needed to keep unemployment trending down, but a slowdown.
Worries about the global economy have led investors to believe that the Federal Reserve will enact another rate cut this month, following a 0.25 percentage point cut it enacted in August.
Strong job growth, though, would have been one data point that could give Fed officials pause about lowering rates. That’s because the Fed, generally speaking, expects low unemployment to lead to higher inflation. And at 1.6%, core inflation is not too far from the Fed’s 2% target.
“With the unemployment rate at 3.7%, this tightness in labor markets should also gradually cause inflation to return to the Federal Reserve’s 2% target,” Federal Reserve Bank of Boston President Eric Rosengren said this week.
Yet Fed critics have noted that inflation has failed to meaningfully breach the 2% target for years, even as unemployment has fallen well below the levels officials thought possible. Put those facts together, and they argue that the economy still has room to grow without sparking too-high inflation, and the Fed shouldn’t choke off potential strong job growth by unnecessarily favoring higher rates.
Trump has been the loudest of those critics, routinely criticizing Fed Chairman Jerome Powell for not easing monetary policy. He’s argued that tight monetary policy has weakened his position in negotiating trade deals with China, Europe, and other partners in commerce.
Trump said Wednesday, though, that he is willing to see the economy deteriorate in order to pressure China to accept new terms of trade.
“To me this is much more important than the economy,” he said of his demands on China. “We had to do this. Someone had to do this with China.”
Manufacturing job growth, which is thought to be highly dependent on trade, slowed to just 3,000 in the month, and has slowed overall in 2019.
2019-09-06 12:30:00Z
https://www.washingtonexaminer.com/policy/economy/economy-added-130-000-jobs-in-august-falling-just-short-of-expectations-amid-recession-fears
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