- Hank Aaron steps to fundraising plate for Democrat Michelle Nunn
- ISIL terrorists blow up burial site of Jonah, vow more of same
- Impeach Obama, say 35 percent in new poll
- Taliban yank 14 Shiites off bus, bind and shoot them on Afghan road
- Obama takes aim at ‘corporate deserters’
- Dick’s Sporting Goods lays off 478 PGA golf pros
- Senators: Cease-fire must allow Israel to defend against rockets, tunnels
- Sierra Leone doctor fighting Ebola catches disease
- Iraq welcomes Russian fighter jets, helicopter gunships into ISIL fight
- John McCain laments: Obama’s ‘self-pity … is really kind of sad’
Federal Reserve stimulus drawdown likely on hold after jobs report
Question of the Day
The Federal Reserve likely will put its plans to start withdrawing stimulus from the U.S. economy off until well into 2014 as a result of a report Tuesday that showed the economy posted only tepid job growth in September, even before the federal shutdown and debt crisis weighed on the economy.
The Labor Department reported an increase of only 148,000 jobs last month, significantly below the average 185,000 monthly growth seen in the past year. While the increase was still enough to help draw down the unemployment rate to 7.2 percent, the lowest since November 2008, it was not robust enough to satisfy the Fed, which is looking for more momentum in the economy before its stops easing, economists said.
“The economy is too fragile for the Federal Reserve to touch,” said Sung Won Sohn, an economics professor at California State University, Channel Islands, noting the rate of growth is “modest at best.” The employment reports for October and November, which will be issued in the next two months, are likely to reflect the dampening effects of the “political brinkmanship in Washington,” and show even slower growth, he said. That means the Fed’s plan to start paring back its purchases of Treasury and mortgage bonds “has been postponed until further notice,” he said.
“The recent pace of payroll growth is unlikely to satisfy” members of the Fed’s interest rate-setting committee, including Fed Chairman Ben S. Bernanke and Vice Chairman Janet Yellen, both of whom would like to see a stronger employment market before they allow the Fed to change course, said Michael Gapen, an economist at Barclays Research.
Both top Fed officials have emphasized that they are closely watching the jobs report for signs of improvement. Ms. Yellen, who is President Obama’s pick to replace Mr. Bernanke when he departs in January, is a labor specialist who has stressed the importance of the Fed taking whatever action is needed to put the nation’s 11.3 million unemployed people back to work.
While the labor report, which was published more than two weeks late because of the shutdown from Oct. 1 to 17, showed the pace of job growth slowed last month, it included revised figures for July and August that showed businesses added 9,000 more jobs than previously reported in those two months.
For the most part, details reveal that September was a non-eventful month in the job market, with average workweek unchanged at 34.5 hours and no changes in the share of eligible adults working or the number of long-term unemployed.
Construction employment rebounded by 20,000 after being static for six months. While growth engines like health care and retail slowed, there were some areas of strength, including wholesaling, transportation and warehousing. Government employment posted its second monthly gain as state and local governments hired more teachers, a sign that the long recession there may be receding.
In another bright spot, average hourly earnings continued to post gains, rising 3 cents to $24.09 and bringing the yearly increase to over 2 percent for a second month. Wage gains had been anemic, growing at less than 2 percent, for most of the four-year economic recovery.
Still, overall economists were disappointed with the report.
“The shutdown has caused an additional headache” for an economy whose slow-growing pace was already disappointing to many Americans, said Chris Williamson, chief economist at Markit.
“The slowing average job growth worries me,” said Justin Wolfers, an economics professor at the University of Michigan. “These aren’t the sort of employment numbers that would make me feel confident that it’s OK to shut down the government and raise default fears.”
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
- Economists see signs of another market bubble
- Crude oil will head north of the border to Canada
- S&P: Boeing to suffer if Ex-Im Bank killed
- U.S. job gains, unemployment dip push markets into record territory
- Unemployment falls to 6.1 percent amid U.S. hiring surge
Latest Blog Entries
TWT Video Picks
Second- and third-stringers eye 2016 if front-runner stumbles
- 'We're coming for you, Barack Obama': Top U.S. official discloses threat from ISIL terrorists
- Obama orders Pentagon advisers to Ukraine
- NAPOLITANO: What if our democracy is a fraud?
- Michelle Obama says money in politics is bad, asks donors for 'big, fat check'
- PRUDEN: The Democratic-wannabe mice under Hillary Clinton's feet
- Hamas rejects Kerry's call for cease-fire; Fears grow others could join fight against Israel
- Presidents of Honduras, Guatemala blame U.S. for border children crisis
- Evidence shows Russia firing artillery into Ukraine: Pentagon
- Norway expects imminent 'concrete threat' from ISIL terrorists 'within days'
- Obama takes aim at 'corporate deserters'
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq