Don’t worry, most economists say. They expect the U.S. to bounce back in September with a 200,000- plus net gain in jobs. And they predict the disappointing 142,000 preliminary increase in August will be revised markedly higher.
“August was definitely a blip,” said Ryan Sweet, a senior economist at Moody’s Analytics. “All signs point to much stronger job growth.”
The employment report for September, issued Friday, highlights a busy week on the economic calendar. In the runup to that report, Wall Street will also get a look at consumer spending, inflationary trends and auto sales — all of which are expected to underscore the bullish case.
Still, it pays to be cautious. The U.S. has experienced several spurts of growth since the recession ended in mid-2009, only to see growth flag, skeptics point out.
“The economy is like a .500 baseball team,” said chief economist Steve Blitz of ITG Investment Research, trotting out one of his favorite expressions about the U.S. recovery. “It’s streaky. It wins eight of 10, then loses eight of 10.”
Sun or shade?
These days the optimists far outnumber the pessimists. Hardly any economic indicators are flashing red, they say. The manufacturing sector is surging, business investment has picked up and the U.S. is experiencing its strongest pace of hiring since the recovery began five years ago.
As the number of Americans working rises and the nation’s 6.1% unemployment rate continues to drop, companies will have to boost wages to attract and maintain workers, they say. And that in turn will give consumers more money to spend.
Bingo. The 3% economy is back after years of mediocre 2% growth.
Perhaps the most soothing sign is the fastest pace of business investment in several years — an 8.1% annualized increase in the second quarter and even faster rate toward the end of summer.
“The evidence continues to pile up that businesses have stepped up their pace of investment,” said Scott Anderson, chief economist of Bank of the West. “Our analysis shows there is a strong correlation between business investment spending and hiring.”
What’s lacking, even the optimists acknowledge, is a corresponding rise in the wages paid to workers. They’ve grown much more slowly, about 2% or so annually, than is usually the case after a recession. And most of what workers have gained has been eaten up by inflation.
Many economists predict wages will finally start to accelerate as the pool of surplus workers shrinks, but if they are wrong, the U.S. probably won’t return soon to its historic annual growth rate of 3.3%.
