Employment Growth Stalls; CRE Ponders Implications

WASHINGTON, DC-After a turbulent August, few were surprised by the weak employment data released by the Department of Labor Friday morning. Or if they were surprised, it was not a pleasant one, as some analysts predicted at least 68,000 jobs added to the national payroll. Instead, the unemployment rate remains the same at 9.1%, with net employment basically unchanged. In addition, July’s figures were revised downward to 85,000.

“There has been no economic growth, therefore that equals no job growth,” Cassidy Turley economist Kevin Thorpe tells GlobeSt.com. “Today’s report is a function of what has been happening for the last six months.”

International and domestic events have played a roll in this in addition to the macroeconomic trends, he suggests. “Everything but the kitchen sink has been thrown at the US recovery in first half of this year. That has created an environment of tremendous uncertainty. For businesses it was clear that the best offense was to play defense and that meant to delay hiring.”

Clearly the job situation is not healthy for an economic recovery. However, Thorpe says, there are other statistics that suggest the recovery’s pulse is still beating, however faintly. In this past week consumer spending has posted the highest gain in four months and wages increased to their highest level in four months, he points out. Also, the Institute for Supple Management’s index of national factory activity posted a score of 50.6 for August. Some economists had feared it would sink under 50. Lastly of note: the roughly 45,000 Verizon workers who were on strike when the Department of Labor's snapshot of employment was taken.

In short, there is room for hope. “If consumers continue to spend we are still in a position where businesses, which remain fantastically profitable, will begin to invest more aggressively,” Thorpe says. There is also a greater likelihood that the Federal Reserve Bank, at its next committee meeting in September, will opt to try more aggressive monetary tactics to jumpstart the economy, based on this report. “That could be QE3 or some other version of monetary support, such as purchasing longer-term securities,” Thorpe says.