Payrolls: Flat is the new up
Everybody was so nervous going in to this morning’s payrolls report that even though employment fell and unemployment rose, markets are looking extremely exuberant.
There’s definitely reason here for a small sigh of relief. The private sector added jobs in August — not enough to keep up with population growth, and not even enough to counteract the effects of census workers being laid off. But hey, the private-sector employment number was positive rather than negative, that’s gotta count for something.
The big picture here is, as Tony Fratto says, that the job market is basically flat. The official release generally has a pretty good take on things, and the language there is clear: the unemployment rate and the 14.9 million number of unemployed are “little changed in August”. Break it down by race or age, you still see “little change”. The labor force participation rate and the proportion of the population with jobs? “Essentially unchanged.” The number of people who want a job but didn’t actively look for one in the previous four weeks? Again, “little changed”.
The big number, total nonfarm payrolls, “was little changed”. Retail employment “was about unchanged over the month”. Elsewhere, employment “showed little change in August”. You get the picture.
Flat, then, is the new up — which only goes to demonstrate just how worried the markets are about a double-dip recession. The syllogism is easy. This payrolls report would never be good news in a growing economy; this payrolls report is good news; therefore, the economy isn’t growing. So don’t get too excited about bond yields rising today. We’re not remotely in full-bore recovery mode yet.