This morning’s report from the Bureau of Labor Statistics showed that the economy lost 33,000 jobs in September—the first time we’ve seen negative job growth in seven years. This is almost certainly a due to Hurricane Irma, which struck smack in the middle of the reference period, and the aftermath of Hurricane Harvey. However, even accounting for hurricane activity, such a loss—on top of net downward revisions in July and August—is concerning for an economy that is still recovering. In order just to keep up with the working-age population growth, we need to add at least 90,000 jobs a month.
The unemployment rate fell 0.2 percentage points to 4.2 percent, while the labor force participation rate and the employment-to-population ratio rose, a positive sign for the labor market. Nominal wages, meanwhile, also showed a nice boost, growing 2.9 percent over the last 12 months. The BLS commissioner notes that this may be due in part to the hurricanes and their aftermath, as well. The food services sector was particularly hard hit in September—losses in this lower-wage sector likely pulled up the overall average wage.
All told, it’s clear that we are still not at genuine full employment, and the Federal Reserve should keep interest rates low until we are. As President Trump considers his options for the chair of the Federal Reserve he should find (or keep) a candidate who will examine the data and consider the workers who have not yet benefitted from the recovering economy.