Even high oil prices weren't supposed to be much of a barrier to booming job creation, and so it came as an unpleasant surprise when July's Labor Department report on payroll expansion showed significantly fewer new positions than expected.
Seeing as how June's numbers had also been lower than hoped for, economists said this "soft patch" in the nation's recovery from recession could turn out to be something larger than the word "patch" implies. All eyes are on August, but meanwhile there was other news to salve anxieties:
- Although payrolls (as measured by a survey of businesses) went up by just 32,000 jobs, the unemployment rate (as measured by a survey of households) went down from 5.6 percent in the previous month to 5.5 percent.
Some say the household figure is more reliable because the payroll survey does not take account of self-employment, while others worry that the unemployment figure may be misleading because it doesn't reflect all those discouraged people who quit looking for work. The better wisdom here is to take the unemployment rate seriously and to understand that it is lower than the average of any of the past three decades.
- A variety of other indicators — measures of consumer and business confidence, for instance — have been mostly positive, indicating that the mighty American economy is in fact moving onward and upward despite those fluctuating oil prices, concerns about the war in Iraq and other negatives.
- A slowdown is not the same as a screeching halt. The July payroll figures, while scarcely a reason to uncork the champagne, do show continued progress.
Assuming the avoidance of disaster, such as a terrorist attack, there should be jobs aplenty as the months roll on. A worse-than-imagined August would be another surprise — and could have adverse political consequences for President Bush — but it would be a contradiction of some of the most reliable theories in economics if even the payroll survey is not showing job-market robustness by year's end.
