CLEVELAND (Oct. 10, 2016) — The Oct. 7 report from the U.S. Bureau of Labor Statistics showing the economy created 156,000 jobs in September was a bit of a puzzler.
Economists who talked with the Wall Street Journal characterized it as “stubbornly average” and below expectations, but The Atlantic said there was “plenty of good news in the details — primarily that an uptick in the unemployment rate to 5 percent from 4.9 percent, paired with a rise in the labor-participation rate, “is likely a sign that more Americans who dropped out of the workforce during the recession are returning to the job market.” Meanwhile, the New York Times characterized the report as indicative of an economy that's “showing resilience.”
You can put Loretta Mester, president of the Federal Reserve Bank of Cleveland, in the glass-half-full category.
Ms. Mester told CNBC on Oct. 7 that the employment report for September was still strong enough to keep her thinking central bankers should increase interest rates.
“It's a solid labor market report,” said Ms. Mester, a voting member this year on the Fed's policy panel, the Federal Open Market Committee. “This is very consistent with what we expected to see.”
She said unemployment — which rose slightly to 5 percent — “is about at what my estimate of full employment is, natural rate of unemployment.”
Analysts had expected a gain of 170,000 jobs or so.
But Ms. Mester also noted on CNBC: “Remember, 75,000 to 120,000 (jobs added) per month is about what you need to keep unemployment stable.”
The Fed's next two-day meeting concludes on Nov. 2, six days before the presidential election. Ms. Mester told CNBC that “all meetings are on the table” for a possible rate increase, and that politics do not have any bearing on policy setting decisions.
This report appeared on the website of Crain's Cleveland Business magazine, a sibling publication of Tire Business.