Sunday, August 08, 2004

To hear the Democrats on the stump, you’d think we slipped into a full-scale depression on Friday morning. Why? Because that’s when the government released its second straight lukewarm jobs report of the summer: 32,000 new jobs in July, and a downward revision to 61,000 in June. On the surface these figures do seem disconcerting, however, there were some bright spots to blunt the dire headlines. The Labor Department’s Household Employment Survey showed a gain of 629,000 in July, leading to a lowering of the unemployment rate to 5.5%.

What to make of the conflicting reports? Either the official jobs report is low because it does not reflect a growing number of self-employed individuals and contractors, or the household survey is inflated due to a narrow sample size, which is not reflective of the true weakness on the jobs front as a whole. If you may recall, the former situation arose back in January and February, wherein the official reports showed tepid employment growth in the economy and the household surveys belied them. I suspect that a similar scenario is occurring now; only the next few reports will tell for certain.

Let’s keep all this in perspective, shall we? Forecasted growth for the 2nd half of 2004 is still very strong, crucial manufacturing activity is up across the board, consumer confidence surveys are all higher than expectations, and over 1.5 million new jobs have been created in last 11 months. Things are still humming along nicely.

Wake me up when some “real” evidence of economic contraction comes down the pike.

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