Economists thought the economy would add 230,000 jobs in August, and unemployment would fall to 6.1 percent. They were half right. Or maybe they were all right. Or all wrong.
The Bureau of Labor Statistics' preliminary jobs data for August says the economy added only 142,000 jobs, breaking a six-month streak in which it added more than 200,000 jobs each month, and the unemployment rate did indeed fall to 6.1 percent.
But these numbers will be revised in the coming months as more accurate data streams down — so August could yet prove to be above 200,000 jobs, or below 100,000. Indeed, making this report even more of a disappointment, the jobs numbers from June and July were revised down by 28,000 jobs.
Not dreadful, but disappointing. The labor market recovery still continues, but while we had hoped it had stepped up a gear, it hasn't.— Justin Wolfers (@JustinWolfers) September 5, 2014
But the job report's divergence from expectations is pretty marginal — especially considering how unreliable these initial data releases are. What's more notable is how similar it is to recent jobs reports. The labor market is recovering steadily, but there's no sign yet of the extended period of 300,000 or 400,000-a-month job growth that would rapidly close the gap between where we are and where we would have been absent the Great Recession.
"The jobs report," however, is not like the weather. It is not a force of nature, or an impersonal whim of the universe. Congress has taken to waiting anxiously for the monthly jobs numbers and then passively applauding or lamenting them, as if they're a summer rainstorm. But, in fact, there's much Congress could do to change them. The infrastructure repairs the country desperately needs remain undone. The tax breaks that were helping the economy sputter along in 2011 and 2012 remain closed.
Another scary stat: Nearly 1.2 million people who've been jobless for a year are between the ages of 20-44. Their prime working years.— Sara Murray (@SaraMurray) September 5, 2014
The excuse for this used to be the deficit: congressional Republicans wouldn't let Washington spend more because it didn't have more. But the deficit picture has improved mightily in recent years. The strongest evidence of this is Medicare, which is seeing per-enrollee spending actually fall. As Margot Sanger-Katz and Kevin Quealy write at the Upshot, the reductions in projected Medicare spending for 2019 are, at this point, "greater than [what] the government is expected to spend that year on unemployment insurance, welfare and Amtrak — combined."
One might think that these huge improvements in fiscal outlook would free Washington to make the infrastructure investments or tax changes that would be both good for the country and good for the labor market. But so far, they've quieted the deficit conversation without reinvigorating the jobs conversation. It's almost as if the deficit wasn't really why Republicans wouldn't agree to more infrastructure investment or the continuation of the payroll tax holiday at all...