Not So Bad …

While the jobs report looked dreary on the surface, there was more to it than first appeared.

Employment fell last month by 54 thousand, led by the loss of 114 thousand census workers. Private sector employment rose by 67 thousand jobs, and in July the private sector added 107 thousand jobs, 36 thousand more than originally reported. Unemployment ticked upwards, but that was because the labor force grew by 550 thousand workers. And the number of people unemployed 26 weeks or longer fell by over 300 thousand people.

Of course, these positive moves don’t mean that the economy is taking off–we haven’t seen the word V-shaped lately–but they do indicate that the economy isn’t ready to fall off a cliff. We’ve grown considerably since the Administration seriously considered nationalizing Bank of America and Citibank in the winter of 2009.

Employment is, at best, a concurrent indicator. It doesn’t tell us what the economy is going to do. But it’s the best picture we have of what the economy is doing. And what it’s telling us is that the economy is muddling right now. Not crashing, not booming but boring. And given what’s been going on in the markets, boring sounds pretty good.

What will happen next? If the leading indicators are to be believed, not much. After growing sharply from March of 2009 through February 2010, the index has been roughly unchanged, with a slight upwards bias. A boring, slow-growth economy. Not great, but not so bad either.

Douglas R. Tengdin, CFA
Chief Investment Officer
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