The Labor Department has just released its jobs report for August. This one has been called the most important report of the entire year — and maybe the past four years — as it falls right after the end of the Democratic National Convention and just a few hours after President Obama's nomination acceptance speech.
The number is bad: We added only 96,000 jobs in August. The headline unemployment rate dropped to 8.1 from 8.3 percent. This is far worse that what ADP reported yesterday — 201,000 — and well below expectations. It is, however, in line with an economy that's expanding very weakly, with GDP growth at less than 2 percent currently.
So no beat of expectations, or a surprise to the upside. This pretty well guarantees that the Federal Reserve will pull the trigger on another round of "quantitative easing," injecting money into the U.S. economy to stimulate growth and get the sluggish jobs market moving. We'll get a decision on that next week, when the Fed meets.
Want some more bad news? The July number was revised down, to 141,000 from 163,000. June was revised down to 45,000 from 63,000. "Revised down" and "little changed" — those are the two phrases we can take away from this disappointing August report.
The good news, such as it is, is of course that U.S. economy continues to add jobs, just not at anything resembling a pace that will pull unemployment down to pre-financial crisis levels anytime soon. In order to see a significant change, we need to see 300-400,000 new jobs each month. We're nowhere near that now.
As for the drop in the headline unemployment rate: it's due to a reduction in the labor participation rate. People are giving up on finding a job right now. The participation rate is at levels not seen since 1981.
In California, we've been adding jobs faster than the rest of the nation, but our unemployment rate, at 10.7 percent, is much higher. It wouldn't be surprising is the Golden State again accounts for a big chunk of August hiring.