A brisk fall

The Economist on our latest unemployment numbers:

There is little to be positive about elsewhere in the report. The number of people working part-time for economic reasons jumped in September, and nearly 10 million Americans now fall into that category. Partially as a result, the statistic known as U-6, considered a more complete indicator of un- and under-employment, rose from 16.7% in August to 17.1% in September. The previously reported jobless figures for July and August were both revised down slightly. Aside from government employment, payrolls in good producing sectors had a rough month, and construction in particular was hard hit, shedding 21,000 jobs. Private services did better across the board, especially the leisure and hospitality sector, which added 38,000 employees. There is indeed a lot more leisure to go around in America these days.

Recent economic data have been relatively positive, which could lead to some strengthening of the private employment growth trend in the months to come. At the same time, the increase in America’s labour market slack will likely confirm the Fed in its determination to ease monetary policy further. But the drag from tightening budgets will present a significant headwind to economic growth (in America and elsewhere). The problem could be compounded if the Congress is unable to agree on measures to prevent reversions to higher tax rates scheduled to occur at the end of the year. The economy is simply not ready to handle fiscal consolidation.

And Democrats may come to regret their eager embrace, this spring, of deficit-cutting rhetoric. Then, as now, the trouble in labour markets should have been the primary focus. With these figures sure to feature in Republican stump speeches for the next three weeks, those up for re-election will pay for their mistake.