“Employment Report Damned with Faint Praise: It Could Have Been Worse.” Thus does Nigel Gault, Chief U.S. Economist of IHS Global Insight, sum up the consensus view of Friday’s unemployment numbers. Jobs added in July; upward revision for June. Even our all-inclusive U-7 dropped .5 percent, its most heartening move in months.
For elaboration, here’s Daniel Gross of Yahoo Finance:
“The July jobs report was the typical blah-ish report we’ve come to expect in the past couple of years. The economy added jobs (117,000 on net), but not at a rate sufficient to make a dent either in the unemployment rate or in the vast armies of underemployed Americans. The trends that we’ve long noticed continued. And while they aren’t cause for elation, they should be cause for some relief. The conservative recovery — one in which the private sector adds jobs every month while the public sector cuts them — continued. The private sector in July added 154,000 jobs while the government cut 37,000. Put another way, in a month in which Washington intentionally concocted a crisis designed to foment uncertainty and paralysis, companies added about 38,500 jobs per week.”
Remember, never read too much into any one month’s unemployment data. The upward revision of June’s numbers — from 18,000 jobs added to 46,000 added — should be sufficient evidence of that. And that admonition applies many-fold to any given day’s market data.
Having disposed of that asterisk, let’s go to the ultimate judge of the economy, the markets. As of this post, a bit after noon, the U.S. stock markets have been gyrating so wildly, there’s no verdict worth reporting. They’ve been up as much as 1.5 percent, down as much as 2 percent. European markets are less equivocal, down close to 3 percent at the moment. Asia’s dropped by around 4 percent, but that was last night and Japan in particular is known for following the U.S., not leading it.
The bellwether of bonds, the U.S. 10-year? It too has been bouncing like the lyrics ball at a Karaoke bar. But as of the moment, it’s still below 2.5 percent. See Bob Shiller’s constantly updated data set and click on the Excel file under “Stock Market Data” to compare that to rates over the past 123 years (the red line). The current rate, you will see, is at Mindanao-Deep levels. Does it reflect a “flight to safety” as in “where else would you put your money at the moment?” Or is it a sign that the U.S. economy is about to stall or, in the vernacular, “double dip”? Probably both.
Speaking of double dips, allow me to share this dispatch from an esteemed journalist friend currently basking in that smallest of states, represented for years by Joe Biden: Delaware.
“You need to be aware that in Lewes, Del.,” my friend writes, “where the family is currently vacationing, you will find a very busy ice cream parlor called…of all things….’Two Dips’. Given the parlous economic times in which we find ourselves, coupled with the roaring trade ‘Two Dips’ is doing every night, there has to be something you can do with this information.
(Bear in mind that after the family departs Lewes this weekend, ‘Two Dips’ will suffer a dramatic and sudden downturn in economic activity).”
I have long admitted to relying upon “anecdata,” that blend of empirical evidence at once small and large that is the staple of journalists everywhere. Moreover, I am indeed scrutinizing every sign I can find these days for a handle on the course of the economy. That said, I am loath to extrapolate broadly from the fortunes of one Delaware ice cream monger, no matter how reliable the source.
Bear in mind, however, that the total value of U.S. stocks dropped by nearly two trillion dollars yesterday. There wouldn’t need to be much of a so-called “wealth effect” – a change in consumption based on one’s total wealth – to melt away profits across the economy.
Meanwhile, here’s some more perspective on today’s job numbers.
From Richard Rahn, senior fellow of the Cato Institute:
“It’s not good. It’s not okay. It’s just not as bad as it was. The labor market continues to shrink and until that starts growing again you don’t really have a turnaround.”
Heidi Shierholz, EPI economist:
“My very first reaction was probably the same one shared by a lot of people: glad it wasn’t a lot worse. My second reaction following closely on the heels of that was: This is not OK. This isn’t going to start bringing the unemployment down in a substantial way. We’re not getting worse but we’re treading water at the bottom of an extremely deep hole.”
Heather Boushey, Senior Economist, Center For American Progress:
“It’s great we created jobs but we’re not doing so at a fast enough pace to soak up all the millions of people who are out of work. It’s great that we didn’t lose jobs. We’re moving in the right direction but we need to be moving a lot faster in order to put ourselves solidly on the right path.”
On the other side of the fence is Greg Ip of The Economist, who says he’s “very encouraged”:
“At any other time we would not jump for joy. [The numbers] are not that strong, but given the backdrop of negative news and [the] market meltdown it is a relief. Enough jobs were created for activity to continue along.”
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions _Follow Paul on Twitter._
Photo by Scott Eells/Bloomberg via Getty Images.