August Economic Data Defies Double-Dip Consensus - Wall Street

Did the failed strike by Verizon employees help contribute to a massive outburst of economic pessimism? The nice, round, pathetic "0″ of net payroll job creation in last Friday's August jobs report added fuel to the argument that the U.S. is headed for another recession — if it's not in one already.

But the jobs report, while awful, wasn't quite as pathetic as it seemed. The 45,000 Verizon workers who went out on strike in early August were counted as job losses, even though they came back on the job in late August. Factoring them in, the private sector created 62,000 jobs in August, not 17,000. That's still terrible, but it does not, in and of itself, suggest an imminent return to recession. You can have economic expansion without jobs growth, but it's extremely rare to have private sector jobs growth without economic expansion.*

But surely things were so awful in August—what with the debt ceiling debacle, the S&P downgrade, the Europe-inspired market volatility and the natural disasters — that the economy ground to a halt. It sure felt that way. But, as Henry Blodget and I discuss in the accompanying video, the numbers we have to work with indicate that the economy was growing in July and August, and at a faster rate than it was in the spring