WASHINGTON — Soft. Tepid. Blech. Meh.
Choose your noninspiring adjective, possibly in Yiddish, and it nicely describes the long-awaited September jobs report. It wasn't terrible by any stretch — the nation added 148,000 jobs, and the unemployment rate edged down a tenth of a percent to 7.2 percent. But it is far short of the kind of robust jobs recovery that Americans have been waiting for these past four long years.
If there is any good news to be found, it is that the unemployment rate is now the lowest it has been since November 2008. But, two important observations: November 2008 was hardly the best of times for the U.S. economy. And much of that decline has occurred because of people dropping out of the workforce; the ratio of Americans who have a job is basically unchanged over the past four years.
Indeed, if there is a trend at all, it is in the wrong direction. In the first six months of 2013, the nation averaged 195,000 net new jobs a month. In the past three months, that average has been a mere 143,000.
So what should we make of yet another month of weak job growth?
First, in hindsight, the Federal Reserve's decision not to begin slowing the pace of its bond purchases in September (the famous "no-taper" decision) is looking better and better. The Fed has said it will keep up its quantitative easing policies "until the outlook for the labor market has improved substantially." While there was a case earlier in the year that that day was arriving, the past few months of jobs reports throw cold water on the possibility, and the uncertainty engendered by the shutdown high jinks in October make the odds of a late-year acceleration in job growth seem remote.
There will be a lot of economic data between now and Dec. 17-18, when Fed officials hold their last policy meeting of the year, but they will likely need to see better data than what we got Tuesday to pull the trigger on tapering.
The second implication of these weak numbers for policy is this: The sequestration policy's automatic spending cuts that went into effect in March are having an effect. It hasn't shown up much in the jobs reports in ways that can be easily measured (though federal government employment excluding the Postal Service is down 73,000 jobs over the past year, a 3.4 percent decline).
But the workhorse economic models used in places like the Congressional Budget Office and Federal Reserve and private sector forecasters all show that the spending cuts should ripple through the economy and translate into less economic activity, and the soft job growth of the past few months fits that story to a tee.
Perhaps the best evidence for federal spending cuts as the culprit behind weak growth is this: It's the only culprit left standing when you consider the other possibilities. Financial markets have been on a tear, and business and consumer confidence has been strong this year (at least until the October shutdown). Consumers have made major progress reducing their debt burdens. The housing market has stabilized and is no longer a drag on the economy.