Weak Job Gains May Cause Delay in Action by Fed

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from The New York Times,

Even before the federal government shutdown and debt ceiling crisis this month, the nation’s economy was lagging and job growth was sluggish. And the recent dysfunction in Congress seems likely to make the situation worse.

The economy added just 148,000 jobs in September, the Labor Department reported on Tuesday in a discouraging economic snapshot taken just before a federal shutdown that resulted in hundreds of thousands of furloughs. That shutdown, which delayed the release of the September employment report by more than two weeks, is expected to weigh on growth when the next monthly job market data is released on Nov. 8, a week behind schedule.

“The labor market lost, rather than gained, momentum over the summer, leaving us with less than a desirable cushion just as the government was shuttered in response to political shenanigans,” said Diane Swonk, chief economist at Mesirow Financial.

This year, in a pattern that has been followed for several years now, economists have been counting on job growth to pick up speed. That could finally start putting a more substantial share of the 11.3 million idle Americans back to work and make a greater dent in the unemployment rate, which ticked down to 7.2 percent last month.

But yet again, those expectations are being dashed. Both experts at the Federal Reserve and private forecasters have scaled back their expectations for growth in output in recent months, with Fed officials and many economists blaming tighter fiscal policy for being a drag on the economy.

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