Pay little attention to those who say the August jobs report isn't as bad as it looks because of the Verizon strike. 45,000 Verizon workers were on strike during the week that the Labor Department surveyed employers. So the optimistic reading is that rather than stay level last month the economy added 45,000 jobs. Doesn't matter much. Addition of 45,000 jobs or additional of zero jobs -- that's far less than is needed to lower the unemployment rate.
This -- in combo with the latest consumer-confidence reading and other weak indicators -- will add to worries about a double-dip recession. And it will put added pressure on Obama when he gives his jobs speech. It also raises odds that the Fed will launch new monetary stimulus in the form of buying longer-term debt. (Normally the Fed adds money to the economy by buying short-term Treasuries, effectively lowering short-term rates. But short-term rates are already basically zero.)
Also discouraging are the revisions to previous monthly jobs reports. Remember the relief rally last month after BLS reported that the economy added 117,000 jobs in July? That got downgraded to 85,000 jobs in today's report. June got demoted from a gain of 46,000 to a gain of 20,000.
The economy really is at stall speed. But does that mean it will start diving? The Economist magazine said this week that the U.S. economy is already so prostrate it's hard to imagine where new economic decline and layoffs could come from. The housing market is at rock bottom. Manufacturing is mean and lean. Well, how about state and local government? And Wall Street?