by Frank James
Uh ohhh. The Labor Department reported bad news this morning in its monthly employment report.
Payrolls decreased by 4,000 workers in August. That was the first drop in four years and indicates that the wreckage from the subprime mortgage debacle could be really be tripping up the overall economy.
Another interesting aspect today's report is that even though the national employment rate is 4.6 percent, employers appear not to have to throw a lot more money around to attract workers. So the relatively low unemployment rate wasn't resulting in increased inflationary pressures.
What those two aspects of the report – the 4,000 fewer jobs and the lack of any notable inflationary push from wages -- means in terms of fiscal policy is that Federal Reserve officials are now under greater pressure to reduce the federal funds rate, the rate that has the greatest impact on the interest rates charged to businesses and consumers for borrowing.
They may not cut the federal funds rate when they meet Sept. 18, but investors will be sorely disappointed if they don't.
Politically, look for Democrats to take up the latest data and weave them into their populist messages. The fall in payrolls will certainly mean a boost in political rhetoric.
Sen. Hillary Clinton for instance, has used as theme that the average American has been "invisible" to the Bush Administration, a message hearkening back to Franklin D. Roosevelt's "forgotten man." The other Democratic presidential candidates have struck similar themes.
Today's numbers play right into that message.
Meanwhile, congressional Democrats are trying to move legislation they say is aimed at giving the middle-class some relief while dealing with the economic anxiety existing in many households right now.
The effort to increase funding for child health insurance and college aid are just two examples. The employment report will help Democratic lawmakers underscore their message.
Republicans meanwhile, can be expected to argue that, despite the numbers, unemployment is still low and the economy has grown robustly as of late, which they typically credit to the series of President Bush's tax cuts passed by a Republican Congress.
The employment report actually could help the Republican message as well since they can argue that a time of economic uncertainty isn't the moment to increase taxes, as some Democrats have proposed.
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Comments
What great news for the Democrats and the media. BIG headlines. Bad news is good news for some.
Posted by: McKinley | September 7, 2007 9:54 AM
After five-plus years of growth, a small blip is to be expected. Let's see what the long-term brings. But, no doubt, all the gleeful Left wing haters out there will pounce on this like the world is coming to an end.
Posted by: John D | September 7, 2007 10:23 AM
Wow! 4,000 in a 300,000,000 person country. Worthy of a headline!
Since the Frank James article above deigns to mention that there's been steady monthly job growth each month for the last four years, did I miss the Swamp articles headlining this?
Don't bother to look. The Swamp has run exactly 2 articles on the monthly job figures prior to this in the 20 months of its existence. The 19 growth months (of the 20) were given 2 articles.
The Swamp's first rule: No good news for Republicans gets reported.
Posted by: Bruce | September 7, 2007 10:26 AM
What great news for the Democrats and the media. BIG headlines. Bad news is good news for some.
Ah yes, but when economic news is good, the wingnuts are always willing to take credit for it. But when it is bad (the failure that is Iraq, the economy, gay republicrite politicians, corrupt republicrite politicians) the wingnuts can't wait to disavow any connection and shoot the messenger. Can't have it both ways folks. Either you take responsibility, as is your mantra, or you blame somon else (more hypocrisy).
Posted by: snitramc | September 7, 2007 10:52 AM
Let's not forget that the previous 4 years of job growth (of staying level) STARTED 2 full years or more AFTER the Cheneybush Regime's reign of terror and economic disaster had eliminated nearly all of those jobs that existed BEFORE their disasterous reign began. What's so geat about destroying millions of jobs and then crowing that it's taken four full years to replace them with lower paying jobs?
If I broke the window to your house and then, four years later, replaced it with a better window - having done nothing in between except steal your car and send your kids off to a death sentence - would you feel good if I bragged about your new window?
Posted by: snalg | September 7, 2007 12:50 PM
As it says in the report, tens of thousands of people have been unemployed for so long that they're no longer counted as unemployed. So no wonder the Republicans will claim that the national employment rate remained at 4.6 percent.
And it's so kind of Bush & the Republicans to try to whitewash the over 2 million jobs LOST in Bush's first 2 years 2001-2002.
Posted by: BC | September 7, 2007 1:45 PM
Snalg and BC, I know history, education, knowledge, understanding, facts, common sense are all qualities so far beyond your grasps that it's quite sad. The reality is those job losses you speak of began BEFORE Bush became president as the economy went into recession at the end of Clinton's presidency because of the tech boom bust (and not Clinton's fault, either). The recession carried to athe first year of Bush's presidency, and all of that was further damaged by the attacks on 9/11.
For once in your lives, get a clue!
Posted by: John D | September 7, 2007 2:39 PM
Snlag,
Economic history will show that coming out of a recession unemployment will lag economic growth. The recession of 2001 ended in November, so not seeing employment growth until 2003 is not surprising. Also, the unemployment growth was assisted by the across-the-board Bush tax cuts.
Posted by: Terry | September 7, 2007 7:15 PM
Another good point Terry. When an economy goes down, loss of jobs is about the last indicator. When an economy improves, job gains are about the last indicator. It's been that way for decades.
The loss of 4,000 jobs is statistically irrelevent until other economic factors begin to take shape.
Posted by: John D | September 7, 2007 9:09 PM