The news that nonfarm payrolls shrunk again last month by 263,000 is bad news, but a little perspective may help minimize the pain.
But first, let’s recognize that there’s just no way to sugarcoat the fact that the economy has been losing jobs each and every month since January 2008. The question is whether the upward tick in job losses last month vs. August is a turn for the worse or just statistical noise on the way toward zero and, at some point, an expansion in the labor market?
We don’t have a definitive answer, of course, but it’s worth pointing out that the reversal in the recovery trend also occurred in the June jobs update, and on a grander scale. But that was temporary and it soon gave way to more progress, albeit in relative terms by way of fewer losses. It’s also worth reminding that the reversal in June didn’t stop investors from bidding up asset prices in the ensuing months. This time, however, we may not be so lucky.