PrintOctober 6, 2007
Job Growth Eases Recession Fears (Updated)
Good news on the jobs front over the summer has boosted the stock market and eased concerns that the economy was headed toward a recession.
Numbers from September as well as some revised figures for August and July show a steady if unspectacular rise in employment:
Job growth was much stronger this summer than the government had first estimated, the Labor Department said, easing fears of a recession and making it less likely the Federal Reserve will cut interest rates when it meets at the end of this month.The report in September represented 49 straight months of job growth.
The economy added 110,000 jobs in September and roughly 90,000 in both July and August, according to the new report. The Labor Department had reported a month ago that the economy lost 4,000 jobs in August.
Wall Street responded favorably to the news, with the Standard & Poor’s 500-stock index jumping almost 1 percent to close at 1,557. The Dow Jones industrial average rose nearly 92 points, or 0.6 percent, to 14,066.
Most analysts expect the Fed to pass on lowering rates when the Board of Governors meets next month which translates into good news for the dollar which has been losing value against other currencies. But troubles in the housing market due to the sub-prime mortgage crisis will continue to plague economic growth and cause the overall economy to remain weak.
The report also noted that wages are keeping pace with inflation and are at an all time high for the American worker - $17.57 per hour in pay and benefits. But the slowing job growth has analysts worried that the wage situation will take a turn for the worse early next year as employers put the brakes even further on new hires.
All in all, the American economy appears to be in a period of slow but steady growth with the prospects for a recession in the near term remote.
UPDATE
Ed Lasky sends along another New York Times link, this time to an "analysis" that paints a much gloomier picture of the economy than the article I linked above.
Ed adds:
This is just another sign of a pattern at the New York Times: casting aside any good news on the economy and trying to depict an economy that is reeeling during the Bush Administration.
The collective wisdom regarding the job numbers figure is that the job growth figures that came out Friday were stellar-particulary considering fears about job losses due to the mortgage and housing crisis and the impact of higher energy prices.
Instead the American economy showed strong resilience and those figures sent the stock market soaring.
The investing community poared many billions into the stock market yesterday in a validation of this view; the Times, in contrast, tries to depict a gloomy economy.
The paper still lays claim to being the "paper of record" for future historians-a claim that is about as credible as the view that Pinch Sulzberger knows how to run a newspaper.
