The United States last month might have suffered the first drop in eight years in how many Americans are working. But it’s not because something bad is brewing for the economy.
The U.S. has increased hiring 83 months in a row going back to October 2010. Yet that streak is in danger of ending, at least briefly, owing to hurricanes Harvey and Irma.
The pair of superstorms carved a swath of destruction through Texas and Florida, the states with the second and fourth highest number of working Americans.
The disruptions could stunt U.S. employment levels in September since so many people could not get to work. The government only counts as employed the people who were actually at their jobs.
Economists surveyed by MarketWatch predict fewer than 100,000 new jobs were created last month. But that’s really just a wild guess and some would not be surprised by an outright decline.
“We have as little confidence in our forecasts of the September employment report as it is possible to have, which is to say none at all,” said Richard Moody, chief economist at Regions Financial.
The fuzziness extends to almost every economic report due this week — from construction spending to manufacturing to auto sales. Take every number with a grain of salt.
The lack of clarity in the short run, however, can’t hide the underlying strength of an economy that’s in its ninth year of expansion. Job openings are at a record high, the unemployment rate recently touched a 16-year low of 4.3% and the stock market keeps setting fresh records.
By November the effects of the hurricanes are likely to have faded. In some cases, vital economic signposts such as employment levels could even show exaggerated gains.
Ignore that, too. The economy is doing just fine, growing 2% or so a year. And with the prospect of major individual and corporate tax cuts looming, growth in the U.S. could get another shot of adrenaline in 2018.
There are worries on the horizon, to be sure. For one thing, the federal deficit could explode again if Congress doesn’t cut enough spending to offset tax cuts.
The Federal Reserve, meanwhile, is gradually raising interest rates and making it more expensive to borrow, another potential dampener on growth.
Inflation might even break out of its straitjacket and ratchet higher.
For now all those potential threats lay in the future.
“The economy continues to chug along,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.