Let me preface this post with the following: (1) Yes, the August jobs report was extremely disappointing and (2) Yes, the report strengthens the argument of those who think there will be a double-dip.
But before jumping to conclusions, I offer these thoughts:
- Remember the week following S&P’s downgrade of the U.S. bond rating? And how stock markets experienced one of the most volatile weeks of trading on record? That week represented Wall Street’s reaction to the economic disaster that comprised the debt ceiling debate combined with European debt woes; this jobs report represents Main Street’s reaction to all of the above. The complete lack of job creation in August is not the result of anything new and unforseen; rather, it is the reaction of businesses to the economic uncertainty that dominated the beginning of the month.
- IN OTHER WORDS, I think that job growth will resume in September, in a big way. The second half of August was much more encouraging than the first half, but because of the time it takes to analyze jobs numbers, that optimism was likely not reflected in the jobs report for the month. I believe that the optimism stemming from the latter half of August will act as a precursor for job growth this fall.
ALSO, here is an important point to consider: the abysmal jobs numbers for August will (hopefully) prompt a strong reaction from President Obama and Congress. So-so results may have meant maintaining the status quo, but the complete lack of job growth means there will be a resounding call to action. The question is, will Congress and will President Obama find a common ground?