Although unemployment fell to a four-year low, the 148,000 jobs created in the new jobs report released today were far fewer than expected, and barely enough to keep up with population growth. The report stoked fears that the recovery has lost steam, and increased pressure on the Federal Reserve Board not to raise interest rates.
"You would think by now you would be consistently creating over a couple hundred-thousand jobs a month, at least," said Brad Levitt, senior economist for Oppenheimer Funds told CNBC. "The Fed wants to see over 200,000 jobs a month on a consistent basis before a change of policy."
National Journal pulled no punches, headlining "The Economy Is Stalling" and calling the numbers "bleak."
"The key phrase for the September report is 'little change,' " National Journal wrote. "The total number of unemployed Americans is little changed from August at 11.3 million. The ethnic breakdowns among the unemployed were also little changed, as was the number of long-term unemployed (people jobless for at least 27 weeks), which stood at 4.1 million for September. The U-6 rate, a broader measure of unemployment that includes people 'marginally attached' to the labor force, as well as people employed part-time for economic reasons, declined only slightly to 13.6 percent in September from 13.7 percent the previous month."
“It’s not like we’re falling off a cliff, but there’s a failure to get any spark in employment,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, told Bloomberg. “Had this report come in strong, there was some possibility of the Fed tapering in December, but that possibility seems to be very small now.”
In a sign of how disconnected stocks are from economic fundamentals, the stock market "greeted the news with enthusiasm," CNBC noted, because the markets assume the Fed will now be compelled to maintain its bond buying to holding interest rates down.
Paul Ashworth of Capital Economics wrote in a statement reported by Forbes that the Fed will hold off unless job growth explodes next month. “Given the government shutdown,” Ashworth wrote, October’s payrolls are likely to be weak too. That means unless November’s gain turns out to be over 300,000, it now looks like the Fed could delay tapering until early next year.”