The Bureau of Labor Statistics on Friday reported that the U.S. economy created 142,000 new jobs in September, much less than the 200,000 economists had forecast and well below the 2014 average monthly jobs gain of 260,000.

Does the paltry 142,000 jobs increase represent a mere blip on the radar screen or is it a sign of deeper weakness to come?  

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Jobs Report: Blip or Omen?

Fri Oct 2, 2015

The Bureau of Labor Statistics on Friday reported that the U.S. economy created 142,000 new jobs in September, much less than the 200,000 economists had forecast and well below the 2014 average monthly jobs gain of 260,000.

Does the paltry 142,000 jobs increase represent a mere blip on the radar screen or is it a sign of deeper weakness to come?

To be sure, the economy is still healthy. The Commerce Department’s Bureau of Economic Analysis reported just last week that real gross domestic product, the value of goods and services produced by the nation’s economy, increased at an annual rate of 3.9 percent in the second quarter of 2015—a robust performance by any measure and among the world’s best.

And September’s gain of 142,000 new jobs was accompanied by a “full employment” unemployment rate of 5.1%, lowest in seven years and, according to the Wall Street Journal, the 60th consecutive month of job increases, the longest winning streak on record.

On the other hand, the BLS jobs report contained a couple of troubling signs: for one, the labor force participation rate, the percent of the working age population in the labor force, dropped to a 38-year low of 62.4% as the labor force shrunk by some 350,000 people in September. Baby-boomer retirees account for only part of the labor force dropout wave.

For another, the pace of monthly job gains seems to be losing momentum. Compared to last year’s average monthly gain of 260,000, this year new job creation has averaged 198,000 a month and over the past three months only 167,000. Job growth may be stalling.

Weighing the pluses and minuses, Friday’s BLS jobs report suggests that U.S. economic growth is slowing. The 60-month all-time consecutive monthly job gains record, like swimmer Michael Phelps all-time record of 18 Olympic gold medals, prompts an obvious question: how much longer can it continue?

And, while the economy so far has avoided the global economic headwinds that have slowed China, Canada, Mexico, Brazil and others, the U.S. cannot expect immunity in an interconnected world. Sooner or later the global economic downshift will affect the U.S.

Blip or Omen?

The big difference between a blip and an omen is that a blip is visible on the screen right now while an omen is known to have been an omen only after the event it foretold has materialized. In this sense Friday’s jobs report can only be considered a temporary blip. But in six months we’ll know if Friday’s jobs report was telling us something else.