The US economy added some 103,000 new jobs during September, a gain that eased concerns that the nation may be slipping into another recession.
But the news Friday from the Labor Department doesn’t mean the recession risk has been entirely wiped away. Rather, it shows the US economy walking what some economists see as a knife-edge line between tepid growth and decline.
The unemployment rate held steady at 9.1 percent in September, roughly where it has stood for much of the year.
“While the numbers indicate a much lower probability of a double dip, they continue to show an economy that isn’t growing fast enough to create enough jobs to drive the unemployment rate down,” Martin Regalia, chief economist at the US Chamber of Commerce, said in a commentary on the labor report. “We’re creating jobs at a pace that is barely enough to employ the new people entering the workforce.”
At a time when a few prominent forecasters see a recession ahead, the Friday jobs report offered some reassurance.
It may not show a strong job market, but it’s a month of improvement:
The private sector added 137,000 jobs in September (while government employment fell by 34,000).
Employment estimates for the prior two months were revised upward. Nonfarm employer payrolls grew by 127,000 jobs in July (revised from an estimate of 85,000 a month ago), and by 57,000 in August (up from zero).
Average hourly wages rose to $19.52 in September, up 3 cents from the August average. And workers are being paid for slightly more hours on the job, 33.6 hours per week versus 33.5 per week in August.
Looking ahead, key questions revolve around US consumers and European nations grappling with a potential financial crisis that would have global ripple effects.
To the degree that jobs and hourly wages grow, consumers will have more spending power, and more spending translates into more hiring by businesses. Consumer and business confidence, meanwhile, could be bolstered if Europe shows growing ability to tackle its sovereign debt crisis – a move that would buoy stock markets worldwide.
Federal Reserve Chairman Ben Bernanke described the economic recovery as “close to faltering” this week, during an appearance before Congress. “We need to make sure that the recovery continues and doesn’t drop back.”
Many forecasters see the US avoiding recession, but they say the current slow momentum means that any significant new “shock” could tip the economy downward.
For some, recession looks hard to avoid. Lakshman Achuthan of the Economic Cycle Research Institute made a formal recession forecast recently, based on the group’s reading of so-called leading indicators.
Another gauge of leading indicators, one released monthly by the Conference Board in New York, has not turned downward so far.
Even if recession predictions prove incorrect, many economists support the idea of new policy efforts to support growth. The Federal Reserve recently embarked on a new program designed to bring long-term interest rates lower, which Mr. Bernanke said should give a modest boost to the economy.
President Obama, meanwhile, is pushing Congress to act on his recent proposals for a jobs plan that blends tax cuts (for workers and businesses) and new spending on infrastructure. In polls, a majority of Americans say they support key ideas in the plan. Economists, meanwhile, say that failing to extend the payroll-tax cut that’s now in place would mean an effective tax hike on US households come January.