Economists React to NFP

October 7, 2005 10:58 a.m.

The WSJ notes that "the U.S. economy lost jobs in September for the first time in over two years as economic convulsions from Hurricane Katrina damped the job market. The Labor Department said Friday that nonfarm payrolls declined by 35,000 jobs last month. That marked the first decline since May 2003, when the labor market was struggling to get back on its feet after being set back by the 2001 recession. The drop was the largest since a decline of 54,000 jobs in April 2003.

Meanwhile, the unemployment rate rose to 5.1%. Does the September employment report present an accurate picture of the labor market after Katrina? What does it mean for the economy going forward? Economists weigh in."

* * *

These were the two most interesting comments, in my opinion:

We doubt that this report has captured all the job losses caused by this storm and none of those that may have been triggered by Hurricane Rita. (For instance, the city of New Orleans last week announced that its loss of revenues was forcing it to cut workers this month.) Thus, next month’s report could reveal additional storm-related job losses. When re-hiring resumes, monthly job gains will tend to generate above-trend growth in employment. It is going to be especially difficult for at least the next two to three months to gauge the underlying national trends in the job market.
(emphasis added)

– David Resler and Gerald Zukowski, Nomura Securities International

We can’t ignore the pain in the Gulf Coast, but we shouldn’t ignore either that for the rest of the country the economy looks to be in good shape. The Fed is more concerned about rising inflation than weakening growth and this report should strengthen that case. With today’s report, I see no reason to expect the Fed to slow its measured pace, but they won’t see any need to go for a half-point bump either. Stripping out energy prices, almost all of the underlying inflation numbers are benign. Wall Street may not like today’s report, but Main Street should like it just fine. 
(emphasis added, absurdity in the original)

– Bill Cheney, John Hancock Financial Services

There’s more after the jump . . .

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Source:

Economists React
October 7, 2005 10:58 a.m.
http://online.wsj.com/article/SB112869228229162786.html
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