"Today's blistering jobs report has quickly reminded America that our economic problems are getting worse, despite talking point reassurances from Federal Reserve officials"
- Todd Schoenberger, managing partner at LandColt Capital
A 16-day long government shutdown is likely to cut about 0.6% from the fourth-quarter growth, suggesting the Federal Reserve will not introduce any tapering of its stimulus in the nearest future. Furthermore, the closely watched labour market is starting to send worrying sings as well. In September the world's largest economy created just 148,000 jobs, following a 193,000 gain in August, and significantly below the median estimate of a 180,000 increase. The overall unemployment rate, however fell to 7.2%, the lowest since November 2008. The participation rate remained unchanged at 63.2%, matching the lowest since August 1978.
The report includes the pay period up to the 12th of the month, two weeks prior to the federal shutdown. It will take some time to confirm that political disputes would lead to a sharp pullback in business activity last month. Nonetheless, the report was highly anticipated, after a 18-day delay.
While the labour market was showing some improvement, with jobless claims constantly falling, the uncertainty stemming from Washington have become a serious headache for employers. Taking it into account, analysts believe the Fed will not wind back its $85 billion monthly bond-buying programme until March 2014.
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