Commentary

Employment Report Lands with a Thud

Thud! That was the sound of January’s dismal payroll number as it landed in the collective face of overly
optimistic Wall Street economists early Friday morning.

Non-farm payrolls contracted by 17,000 last month, marking the first decline since the summer of 2003. The “thud” that was heard around the world’s trading salons was the result of reality smacking fantasy for a loop. The consensus among Wall Street economists was for a healthy increase of 85,000
jobs last month.

Total hours worked and wages earned declined as well. Job growth in the American economy has slowed to just 41,000 over the past three months, down significantly from the average of 109,000, which marked the first quarter of 2007. The carnage was widespread, with only the retail, health, education and leisure sectors adding new positions.

This dismal news is actually welcomed by many who ply the treacherous financial markets because it increases the chance of another interest rate cut by our panicky Fed chairman, Ben Bernanke. But, rate cuts will not cure the effects of a credit boom and housing bubble that are quickly turning to bust.

This sad employment report signals that the implosion in the banking industry and housing markets, which was brought on by reckless lending, is starting to negatively impact job creation and disposable income. Maybe Wall Street’s economists will have better luck forecasting next moth’s numbers.

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