Ouch! That stings. The private sector created substantially fewer jobs in August than expected, according to this morning’s monthly update from the US Labor Department. Private payrolls increased 134,000 last month, far below the consensus forecast that anticipated a gain of 220,000, according to Econoday.com’s estimate. Even worse, the August rise is the weakest so far this year. Compared with July’s 213,000 gain, the tepid advance in August looks troubling. But there are several reasons for reserving judgment on whether today’s release warrants a radical downsizing of expectations.
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There’s a spirited debate raging among economists about the long-run potential for growth in the US economy. Among those who expect that the future will suffer a lesser rate of growth is Robert Gordon, an economics professor at Northwestern and a member of the Business Cycle Dating Committee at the National Bureau of Research. In a series of papers recently (here, for instance), he argues that a number of trends (demographics, wealth inequality, falling educational results, rising debt levels) will squeeze the average annual growth rate of GDP in the decades ahead.
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