How bad did the government shutdown hurt the economy? It turns out it wasn't the end of the world after all.
The big news from today's employment report from the Labor Department was the number of jobs added in October: 204,000, more than double what was expected, as MSNBC's Suzy Khimm noted.
Expectations were around the 110/120k mark--half as many jobs, mostly b/c of shutdown.
— Suzy Khimm (@SuzyKhimm) November 8, 2013
Not only that, but the Labor Department revised its numbers for the past two months, adding 60,000 jobs in August and September to its previous estimates. The unemployment rate did rise to 7.3 percent, from 7.2 percent — mostly because the government counted temporarily furloughed workers as unemployed. Here's CBS' Mark Knoller:
BLS says workers on "temporary layoff" was up by 448,000 incl furloughed federal workers classified as "unemployed on temporary layoff."
— Mark Knoller (@markknoller) November 8, 2013
Overall, this is a pretty good jobs report, even by non-shutdown standards. The biggest winners were manufacturing and the service sector. The Washington Post's Reid Wilson:
Winning sectors: Manufacturing +19k, retail trade +44k, admin/support +16k, health care +15k, food service +29k, arts/entertainment +15k
— Reid Wilson (@PostReid) November 8, 2013
What does this jobs report mean for the U.S. economy in general? Like yesterday's GDP numbers, it indicates that America is recovering — but not quickly or robustly enough to make a difference to many Americans.
As the progressive Economic Policy Institute notes, the United States would still need to add 8 million jobs to reach pre-recession levels of employment. And the jobs that Americans do have aren't necessarily paying all the bills, writes The Wall Street Journal's Michael J. Casey:
We might be adding jobs but it's not doing much for the bottom line of those who already have one. The two-cent increase in average weekly earnings to $24.10 puts the monthly increase below 0.1 percent… On an inflation-adjusted basis, the American worker is still doing very badly. It's another reminder that [quantitative easing] from the Fed has done wonders for the owners of financial assets but not much at all for Main Street. [Wall Street Journal]
That's a reference to the Federal Reserve's quantitative easing program, in which the central bank buys $85 billion worth of Treasuries and mortgage-backed assets a month to encourage the flow of credit. Indeed, the fact that the labor market appears to be on solid ground could lead the Fed to begin winding down the program, a process that is widely referred to as tapering.
But it's also too early to declare how, exactly, the government shutdown affected the economy. A single month's jobs report — especially under such unusual circumstances — includes a lot of noise.
"It will be difficult to tell how much is from the shutdown and how much is the underlying trend," Dean Maki, chief U.S. economist at Barclays, told The New York Times. "There won't be a clean way to do it."