Job Numbers: Good But Not Good Enough for GOP

Today's new jobs numbers from the Labor Department were a missed chance for President Bush and congressional Republicans to slightly nudge the national conversation away from Mark Foley and E-mails and instant messages. The headline — Jobless Rate Drops to 4.6 Percent — is certainly positive news for them, but it wasn't coupled with the sort of boffo job-growth numbers needed to create a clear, unambiguous picture of a powerful, pro-incumbent economy. (According to the Intrade political betting market, the GOP has just a 44 percent chance of keeping the House, though the economy is obviously not the only factor in voters' minds.)

Only 51,000 new jobs were created in September — less than half of what Wall Street was expecting — though the August numbers were revised upward by 60,000 jobs to 188,000, giving a solid three-month average of 121,000. Plus, the stock market fell in early trading as investors worried that the report made it somewhat less likely that the Fed will be cutting rates in the near future.

As economist Nigel Gault of Global Insight puts it: "[The overall jobs report] does raise doubts over whether the economy is slowing as much as payrolls suggest. And a still-declining unemployment rate dashes the notion that the Fed might be cutting interest rates soon."

A couple of other things to take away from this much awaited report:

• The Labor Department also said it was preliminarily revising upward its job numbers for the year ending in March 2006 by more than 810,000. That means the economy created nearly 50 percent more jobs in those 12 months than first thought — which makes the disconnect between economic perceptions and economic reality even more puzzling. One could argue, though, that the higher job numbers might have resulted in more positive media coverage of the economy back then. As Bear Stearns economist John Ryding explained in a research note today: "The massive upward benchmark revision to payrolls changes the history of job creation significantly."
• Wage growth, whether measured by hourly or weekly earnings, rose by 0.2 percent in September and 4.0 percent year over year. Of course, those numbers don't take inflation into account. If inflation rose by 0.3 percent and 4.1 percent, respectively, then workers were a few bucks to the worse. But the top-line September inflation number — the one that includes food and energy — is likely to be way down or even negative, thanks to the falling price of gasoline, when it comes out on October 18. That means more money in voters' pocketbooks before Election Day.