On it’s face, the August jobs report from the Bureau of Labor Statistics doesn’t look too bad for the economy. The economy added 130,000 jobs, missing the 150,000 mark expected by economists. Unemployment is steady at an excellent 3.7%. But buried in the numbers are key details that indicate a fragile economy.
For one thing, 25,000 of those 130,000 jobs are temporary ones created by the government for the sole purpose of the 2020 census. For another, the BLS revised downward the reported employment gains in the already mediocre June and July jobs reports by a cumulative 20,000 jobs. Still, the average jobs gains in the past three months are 156,000 per month, meaning that August constituted a slight but sure drop.
There’s some very good news below the surface, to be sure. The most important metric indicates that while industry may be spooked by President Trump’s trade war, we’re likely not on the cusp of a recession in earnest. The BLS found that annual wage growth has increased by 3.2%, beating expectations, and significantly, the hours worked by all employees and manufacturing workers alike marginally increased. Manufacturers still hired another 3,000 workers. Better-than-expected wage growth and increases in hours worked will likely take pressure off the Federal Reserve to enact another rate cut. That may irk the president, but given our historically low federal funds rate leaving us bereft of our main monetary tool to kick-start the economy in case of an actual recession, that’s good news for the economy.
But here’s the bottom line: Without the Census Bureau adding temporary canvassers and given the continued slow bleed of jobs in pivotal economic sectors, including retailers, transportation, and warehousing, this jobs report would be worse than weak. All things being equal, employment growth in 2019 will be the worst since 2010, all while Trump is increasing the number of people employed by the government.
A lot of this is out of Trump’s control, though his surrogates will likely use this report to try and bully the Fed into cutting rates and spin such a weak report into a win. But the BLS continues to confirm what we all already know: Trump’s trade war is toying with an economy already at risk of sliding into a recession.