Zero Jobs Growth But Not Necessarily Recession

The news Friday that the economy created zero jobs in August is ominous, but it doesn't necessarily mean we're heading for another recession.

“Most of the releases that came out earlier in the week were a little bit better than generally expected and this one was a little bit worse,” said Mike Montgomery, U.S. macro economist with IHS Global Insight.

Instead, Montgomery said the weak employment report could be yet another sign that the U.S. is continuing to muddle through some serious economic doldrums. That may be better than a recession, but it's still an extremely unpleasant prospect for the many Americans who have been out of work for months or even years.

The Bureau of Labor Statistics reported Friday that the unemployment rate held steady at 9.1 percent with about 14 million Americans out of work and actively looking for a job.

The jobs report came on the heels of recent economic indicators pointing to a troubled — but not necessarily recessionary — economy.

The employment figures were affected slightly by a strike at Verizon, which took 45,000 people off the employment rolls for the month. But another 22,000 workers returned to the employment books because a government shutdown in Minnesota ended.

In a research note Friday, economist Paul Ashworth of Capital Economics noted that the economy has created less than 100,000 jobs for four months straight. On Friday, the government said job creation in June and July also wasn’t as good as they originally thought.

“Even allowing for the disruption of the strike by 45,000 Verizon workers last month, the stagnation in U.S. payroll employment is an ominous sign,” Ashworth wrote in the note.

One big problem is that employers should be hiring more workers just to keep pace with the number of new workers who come into the job market each month.

“Our real sort of zero in the labor market is more like 90,000 or 100,000 jobs added,” said economist Heidi Shierholz with the liberal-leaning Economic Policy Institute. “That’s what we need to just keep up with population growth.”

Instead, many people appear to be staying on the sidelines. The labor force participation rate — the percentage of people employed and those who are unemployed but seeking a job — is currently at 64 percent, up a tiny bit from July but still very low by historical standards.

When the recession began in December of 2007, 66 percent of Americans were participating in the labor force.

The weak employment report comes on the heels of other economic news that showed a nation struggling mightily, but not necessarily stalling out.

The Institute for Supply Management reported Thursday that its index of manufacturing activity slid slightly in August but didn’t reach the point of contraction. Initial claims for state unemployment benefits also fell slightly in August, and surprisingly strong new car sales was seen as a positive sign.

Montgomery, of IHS Global Insight, said there still is reason to worry the U.S. will head back into recession.

“Our forecast basically says that there is about a 40 percent chance, but we haven’t a smoking gun yet that says things are going to hell in a handbasket,” he said. “There’s still a tolerable chance that things could muddle through.”

Shierholz said the weak employment report certainly increases fears that the nation could be heading back into recession. But she noted that whether the U.S economic growth rate dips below zero or not, the current rate of economic growth is still quite worrisome.

The National Bureau of Economic Research generally defines a recession as a period of several months or longer in which there is a significant decline in economic activity. Although the nation has been struggling with a weak economy for years, the most recent official recession only lasted from December of 2007 until June of 2009, according to the NBER.

The Commerce Department said last week that gross domestic product rose at an annual rate of just 1 percent .

“With that growth rate we will never get out of this mess,” Shierholz said.

Dean Baker, economist with the Center for Economic and Policy Research, called the data bleak.

“This report shows an economy that is growing, but at a very slow pace. It is not even creating sufficient jobs to keep pace with the growth of the labor force,” Baker said in an analysis note.

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  • by Obama Snake Oil co Location: Washington on Sep 4, 2011 at 05:19 AM
    I am so glad the tea party called the democrats on their overspending problem. Otherwise, we would have a greater debt with nothing to show for it than we have now! I am also glad that Jimmy Carter is no longer the worst president in history...seems Obama will have that place in history. Well, 2012 will be here before you know it and so will republican control of both houses and the president. Just cannot decide which anybody but Obama will be elected. So many good choices out there in the GOP. Heck, look what we have now and I know no idiot that would want more of the same. Even the left has reservations as well as the minority vote...buyers remorse. The funny thing? Democrats sit their in a denial I have never heard of...they really have no clue what the Americans want...well, hint, create an environment for jobs and now just enforce Obamas EPA over envirionmental regs...
  • by Anonymous on Sep 3, 2011 at 08:03 PM
    The republican party has done everything it can do to create a failed American presidency, yet they think of themselves as being patriots. I think they are close to traitorous. They no longer serve America, nor do they care for the fate of Americans. All they care about is no taxes for the rich, which of course includes themselves. The Tea Party radicals and crazies have taken over the republican party and they have created a klan of kooks and fanatics. I will not vote for a republican for many years to come because of this lunacy. Bohner, McConnell, and the other wackos are completely nuts if they think their childish behavior is what the American people desire.
  • by Anonymous on Sep 3, 2011 at 03:01 PM
    Of course the dems must blame others, they know NOTHING about EXCECPTING RESPONSIBITYfor thier own actions. Don't blame the republicians, or the tea party, don't blame bush, he has been in office for 3 years and hasn't done anything but hurt us. the dims are so blind.
  • by worthless dims on Sep 3, 2011 at 02:32 PM
    I forgot the great god oBUMa is going to take all by the hand and lead us all to a better place. Sounds good on the stump, but his actions put the lie to his words. Nothing he has done has helped, and that is for the first 2 years, when the dims control the whole of congress and the white house. The only thing he has proven is that he is either stupid or totally incompetent. So which is it? he and the dims are worthless.
    • reply
      by to dim and Worthless on Sep 3, 2011 at 08:01 PM in reply to worthless dims
      I guess Dim and Worthless@5:32 gets amnesia when they ask the same stupid questions "Where are the jobs Mr. Obama?". Let's see, from what I remember, the President doesn't create and vote laws on the house floor. Absolutely EVERY bill that has been introduced to the floor that has anything to do with giving Mr. Obama credit for achieving growth has been voted NO and/or filibustered by the GOP. All of them, with the exception of the ones that gave tax breaks to the wealthiest in the US. Why no jobs? Becasue the GOP have made sure that nothing gets passed, that's why. The POTUS can only suggest what needs to be done, but congress is supposed to pass a budget, and introduce and pass laws to be signed into declaration by the POTUS.
      • reply
        by worthless dims on Sep 4, 2011 at 04:46 AM in reply to to dim and Worthless
        you must have a bad case of amnesia, your beloved DIM's held the congress for the first 2 years, and still didn't do anytrhing. oBUMa can propose a budget, and present it to congress, BUT HE NEVER DID! The only thing that oBUMa has done is drive more people to get food stamps and other entitlements!
  • by fred Location: martin co on Sep 3, 2011 at 02:18 PM
    How is the _____Hope and change thing----working for you?
    • reply
      by ever played chess? on Sep 3, 2011 at 07:30 PM in reply to fred
      How is that 98% of what You wanted, and the Shellacking working out for you? The economy and jobs were south after each. Now you want more of the same GOP policies?
      • reply
        by checkmate on Sep 4, 2011 at 04:47 AM in reply to ever played chess?
        beats getting more of the worthless dim party emtitlement programs.
  • by Jay on Sep 3, 2011 at 01:51 PM
    Its hard to believe anything that Obama says anymore. He's built his presidency on making speeches, not action.
  • by Zzyzx Road Location: Pitt County on Sep 3, 2011 at 01:49 PM
    "Zero Jobs Growth, But Not Necessarily A Recession". Lets just extinguish the torch on the Statue Of Liberty and hang a sign on her chest that reads: "Will the last person leaving the United States please turn out the lights?"
  • by Destroy America, and regain power on Sep 3, 2011 at 12:01 PM
    It seems so painfully obvious. Republicans are bent on destroying the economy so that a repub president gets elected. If you look at just about everything they say and do in that light it all makes sense. There is never a shred of evidence offered for any of the repub positions on the economy. Reducing the deficit will increase employment, sure in bizzaro land. Uncertainty is responsible for a lack of hiring, seriously? It's all unsubstantiated nonsense with only one objective, and like it or not, we all know what the goal is.
  • by ? on Sep 3, 2011 at 11:04 AM
    This is getting old, this whole let's blame Bush/Obama for everything that could go wrong in our lives. All of our problems start with the Federal Reserve Act of 1913 that Mr. Wilson, a Democrat, signed in to law an unfunded paper based system on all of America, which is operated and controlled by private banking organizations. Only President John F. Kennedy, also a Democrat, wanted to fix that problem with “E. O. 11110”, the first commodity backed currency since Roosevelt. But in March 1964, Secretary of the Treasury C. Douglas Dillon, a Republican, who was also a key player in the Cuban Missile Crisis, halted redemption of silver certificates for silver dollars. President Ronald Reagan, a Republican, finalized the revocation September 9, 1987, but by this time the remaining legislative authority behind “E.O. 11110” had been repealed by Congress when “Pub. L. 97-258”, which was introduced by Democrat Pete Stark, was passed in 1982 by both a Republican (Senate) and Democrat (HoR) controlled Congress. So thus, with the exception of one Democrat, both parties should be blamed for our current economic problem, which is also causing our job market to plummet. See how informed you can be when you learn about what our Government does on a daily bases.
    • reply
      by bravo ? on Sep 3, 2011 at 02:41 PM in reply to ?
      excellent posting, finally someone who can get around party BS and look for facts. Thank you for this!
  • by Anonymous on Sep 3, 2011 at 10:42 AM
    Obama warned of this nonsense back in November of 2010 saying we the American people have two choices. We can move forward with the Dems or go in reverse with the Repubs. Don't complain now that nothing big or grand is being done. Had we left Pelosi as leader of the House we would have many big grand scale programs being initiated right now. Funny the Repubs took their win in 2010 as a rebuke of too much government and too much spending. Let the private sector do everything they say. But then when the private sector does nothing they blame government for it!? How does that work exactly. You either want government to help or you don't. Can't have it both ways people!
    • reply
      by Party of Jerks on Sep 3, 2011 at 11:50 AM in reply to
      He also warned the GOP/Tea what would happen if they played around with the Debt Ceiling, and just like he said, the US got a downgrade. He should have said that he did not want it increased, the GOP/Tea would have increaded it immediately!
    • reply
      by with what money? on Sep 3, 2011 at 01:06 PM in reply to
      grand scale projects = major goverment speading with no money in the budget. No restrictions on the limit of money spent and driving the USA deeper and deeper in debt and bankrupting us.
      • reply
        by why do Repugs protect Big profit making Oil Companies, and throw the middle class under the bus? on Sep 3, 2011 at 07:36 PM in reply to with what money?
        The country must not need money if the Republicans can giv-a-way potential revenue to their Big Oil Company friends. By a vote of 52 to 48, the Senate failed to take up debate on a bill from Senator Robert Menendez (D-N.J.), the Close Big Oil Tax Loopholes Act, that would eliminate over $20 billion in subsidies for oil companies and use the savings to reduce the national debt. Three Democrats joined all but two Senate Republicans in voting to protect oil company handouts.
    • reply
      by Obama Snake Oil Co on Sep 3, 2011 at 01:54 PM in reply to
      Suck it up, you lost. You voted for a socialist that knew nothing about government or economy. You went for idealogue. Well, it failed as it always does. Go read the EPA reg story if you want to know why Congress didn't pass the cap and trade bill. Obama did this all on his own with the EPA and now, it bites. We don't want government that helps, we want government that works for us. Go cry a river...tissues are on sale at the lion!
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