Susquehanna Bank economist: Slow jobs growth not enough
The national economy added about 169,000 jobs in August, according to the U.S. Bureau of Labor Statistics. But unemployment rates edged down from the previous month only slightly, all which has some economists saying the progress is too slow to dramatically improve matters.
“The job creation is positive but slow. It’s just not enough to get us to full employment,” said Bernard A. Francis Jr., an economist and senior vice president and director of wealth management with Lancaster County-based Susquehanna Bancshares Inc. The company is the parent of Susquehanna Bank.
The U.S. unemployment rate fell a tenth of a percentage point to 7.3 percent in August, according to BLS. That’s down from 8.1 percent from a year ago.
The issue with job growth and even the steady decline in unemployment numbers is that the growth of the labor force eats up those jobs faster than they’re created, Francis said.
Essentially, the report doesn’t change much about the economic forecast Francis gave to the West Shore Chamber of Commerce on Wednesday.
The slow growth has extended the recovery far longer than that of any other recession, he said. And gross domestic product growth for the first six months was just 1.7 percent.
“That’s substantially, substantially below what most people thought we would be doing,” Francis said.
Other factors bode well in the jobs report, such as income growth, which could drive more consumer spending, and the drop in rates of people who are unemployed yet have stopped looking for work, he said.
That likely doesn’t change other economic factors, which could put pressures on the economy.
The Federal Reserve is expected to taper its buying of U.S. Treasury debt, which could cause interest rates to rise even if the Fed keeps the central interest rate on loans low until 2016, Francis said.
And there is the unruly domestic and international political arena that could produce some X factors in the economy, he said. What effects U.S. intervention in the Syrian civil war has are yet to be seen, as well as what Congress does about federal spending and the debt ceiling.
Still, there are positive signs that the slow and steady recovery will continue.
“The housing market continues to improve, certainly faster than it was,” Francis said.
As housing inventories fall, demand and price will increase, he said.
Natural-gas and oil industries will help, particularly as the U.S. and Canada improve extraction technologies, he said.
And in the stock market, there is money to be made in the emerging economies such as Brazil and China. Many of those economies have stronger growth rates than the developed economies, which have plateaued.
Overall, the economy is a mixed bag.
“The pace is going to be a bit slow for a while,” Francis said.