Economists React to the Jobs Data: "...A Mixed Bag, But Tapering Still Likely"

From Real Time Economics:

Economists weigh in on today’s jobs report that showed a smaller-than-expected job growth but a stronger unemployment rate. Some suggested the Federal Reserve is still on track to consider paring back its large-scale bond purchases as soon as its next policy meeting, Sept. 17-18. Other analysts said that is no longer certain.

The headlines seem pretty good. Unemployment fell a tick to 7.3%. And jobs growth continued, with payrolls expanding by 169,000 in August, which is just shy of the 175,000 new jobs that analysts were expecting. But beneath the headline: blech! The most important news was the revisions to what we had previously thought were a healthy and perhaps self-sustaining recovery. Instead, jobs growth in July was revised from 162,000, to a weak 104,000, and June was also revised downward. Taken together, this month’s revisions mean we’ve created 74,000 fewer jobs than previously believed. And the previous jobs report subtracted another 26,000 jobs through revisions. Moreover, for reasons that remain a mystery, revisions have tended to be pro-cyclical, meaning that the healthy recovery we thought we were having might have been expected to yield further upward revisions. All this means that analysts are hastily revising their views. –Justin Wolfers, Brookings senior fellow in economic studies

Participation rates fell for both adult men and women and even more so for teens. This is not good news for the employment/population ratio. Declining participation rate bad for financing entitlements long-term and potential economic growth trend. –John Silva, Wells Fargo. The participation rate dropped to its lowest since August 1978.

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