Sideways isn't good enough
WE WILL have a full analysis of the American jobs figures up shortly, but I wanted to offer a few quick thoughts. First, the main numbers—a net employment gain of 117,000 jobs, attributable to a 154,000 gain in private sector employment offset slightly by a 37,000 drop in government employment—aren't meaningfully different from the recent trend. May and June employment gains were revised up a little but remain well below 100,000, and the general picture is of an economy that's not creating jobs fast enough. The household survey reinforces this; the employment-population ratio continues to tick downward. There has been no recovery, at all, in the share of the labour force with a job.Second, forward-looking indicators aren't encouraging. The employment outlook for industry is darkening, fiscal drag is expected to increase, and markets have gone through a bloody two weeks. Falling markets signal rougher times ahead and, through the wealth effect, help bring rougher times forward.Finally, I'm not sure we're not in bad-is-good territory at the moment. This report is entirely consistent with expectations of a dip back into recession within the next year. Yet it might be just good enough—positive, and a smidge above expectations—to convince the Fed that it can wait until its September meeting to make a call on new easing. It might be just good enough to convince legislators that recent panic has been overstated, and a payroll-tax-cut extension isn't actually warranted.Don't get me wrong; I'm not cheering for bad news. I would have loved to see a report that signaled a real improvement in the labour market outlook. This isn't it. If it serves as an excuse for complacency, that's bad news for everyone.