Not good
The 16-day government shutdown almost certainly affected hiring in the private sector and for sure in the public sector.
But until the jobless report for November is issued in December, we won’t know the extent of the damage.
The Labor Department now reports the economy added just 148,000 jobs in September, a steep drop from the robust 193,000 employees added to the workforce in August. The drop in hiring may be, as Reuters suggests, a loss of momentum in the economy, or it may be employers laying off workers or holding off hiring in anticipation of a shutdown.
The anemic jobs numbers may be a harbinger of worse to come for October. It is hard to believe a shutdown that took $24 billion out of the economy and cut 0.6 percent off gross domestic product growth will not have some ill effect.
And the budget battles that led to the shutdown are likely to flare up later this year and in early 2014.
Last week, Congress agreed to keep the government running only until Jan. 15 while President Barack Obama and Congressional leaders seek a broader budget agreement.
In the meantime, uncertainty about another budget impasse — and potentially another government shutdown — may cause some businesses to hold off on hiring or expanding.
“Companies are not feeling confident enough to expand, to hire, to invest,” said Yelena Shulyatyeva, an economist at BNP Paribas.
“They’re just sitting on the sidelines, being cautious, and watching all these headlines from Washington.”
To cite one example, the Labor Department had to lay off federal workers and government contractors who collect and analyze the employment data, resulting in a 2 1/2-week delay in the September jobs report.
The unemployment rate fell to 7.2 percent, down from 7.9 percent at the beginning of the year and close to a five-year low. But the lower rate reflects the fact that fewer people are actively looking for work. In fact, The Associated Press said the percentage of Americans working or actively looking for work is at a 35-year low.
However, the weak jobs report means the Federal Reserve will continue its $85 billion-a-month bond-buying program well into next year rather than begin to taper off this fall as originally planned. News that the stimulus program would continue caused the Dow Jones industrial average to rise 60 points by mid-day Monday.
The construction, wholesale trade, and transportation and warehousing industries all added jobs, according to the Bureau of Labor Statistics.
But wages remained roughly stagnant, up 3 cents an hour to an average $24.09, and the workweek was unchanged at 34.5 hours.
If there was one bright spot, it was scattered reports of U.S. companies bringing back the jobs they had outsourced overseas.
However, these improvements still are not bringing us close to the 200,000 new jobs a month economists say we need for a truly robust economy.
It certainly wasn’t in October and likely not November and December, either. Maybe in 2014.
– Scripps Howard News Service