Friday’s jobs report was mostly steady-as-she-goes. More jobs were created in July than anticipated, though largely in line with the monthly average of about 200,000 that the economy has notched in the past five years. The jobless rate returned, as forecast, to a historically low 4.3 percent. Wages continued their unspectacular growth.
This isn’t a bad result. It’s a sigh of relief after a week of pretty mediocre economic reports: growth in America’s services industries cooled notably in July as auto sales disappointed. On the upside, manufacturing managers were more upbeat.
Nevertheless, the economy is stuck where it is has been for much the eight-year expansion: growing at an annual rate of 2 percent to 2.5 percent. That’s not terrible, which is about the best thing you can say about the U.S. economy at the moment.
The stock and bond market rallies late last year, which fans of President Donald Trump attributed to optimism about tax cuts, deregulation and government infrastructure spending, were arguably really about the global impact of a positive turnaround in Chinese producer prices that began in September. The president has struggled to get much of anything passed, let alone the tax changes and infrastructure plan that were supposed to lift economic growth toward 3 percent.
So it’s a good thing the International Monetary Fund noted late last month that the world recovery is looking more robust. That is, it’s less dependent on the U.S. China, Japan, Europe and Canada are picking up. That will mean more exports and more confidence that the U.S. isn’t carrying the load itself.
The solid July employment numbers will probably change few minds at the Federal Reserve, where officials seem inclined to begin reducing their balance sheet next month with the prospect of another interest-rate increase in December.
There are still significant challenges: Wages are stuck and inflation is receding instead of accelerating.
None of this is new. And that is fine. The U.S. economy just isn’t where the momentum is right now. That rests with Europe and Canada, which the IMF predicts will be the strongest among the Group of Seven nations this year.
So let’s give this jobs report it’s due. Not bad at all. What’s strong has been strong for a while. What’s been wanting is still wanting.
It’s the world of 2 percent growth. We know it well.
Daniel Moss has been the executive editor of Bloomberg News for global economics. He has led Bloomberg News teams in Asia, Europe and North America.