Bleakonomics: Jobs Edition

When economists forecast that 125,000 jobs will be added during a given month, you expect some variation in the final figures. When the report for that month instead shows that employment was reduced by 4,000 jobs, you can expect some serious economic introspection to take place.

What are the implications of an economic report so seemingly out of left field?

It suggests that the risks of a serious economic downturn due to problems in the housing markets are higher than had been thought, said economists. "People have been saying for some time, the consumer will be affected by housing, but as long as job growth continues, the consumer will be okay," said Nigel Gault, a U.S. economist with consulting firm Global Insight. "Well, now here we are at minus 4,000 jobs."

If this trend reverses in September, or stabilizes, that will be a decent indicator of resiliency, or at the very least some elasticity in the American economy. I worry that won't be the case, though. Economic issues often run quiet and deep until they don't, and then things get dicey as regulators and government attempt to fix now what went wrong a year or more ago.

Apparently, things are tough all over, even in areas that had proven to carry an overall sturdy grounding:

Not so in August. The manufacturing sector shed 46,000 jobs, which surprised analysts. While manufacturers that make building materials and other products tied to the housing market have been suffering, many other segments of manufacturing had seemed to be in okay shape.

A new dynamic also added to the August drop-off: layoffs in the mortgage industry. Difficulty in the credit markets, a slowing real estate sector and tightened mortgage standards all hit hard in August, forcing some mortgage companies to close their doors and forcing others to fire employees from a sector that had been booming in recent years.

As for what this means politically, it could go a number of ways. I think the mortgage and real estate hearings will grow into a natural extension of figuring out what the wider economic implications may be.