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Economists Cautiously Applaud Jobs Report


This is WEEKEND EDITION from NPR News. I'm Susan Stamberg in for Scott Simon. In an encouraging sign for the U.S. economy, the Labor Department told us yesterday that the country gained 163,000 jobs in July. That was better than expected but not all signs are pointing up. In a separate government survey, the unemployment rate increased slightly to 8.3 percent. NPR's Chris Arnold is at a gathering of economists in northern Maine. He sent this report.

CHRIS ARNOLD, BYLINE: Every summer, some of the country's top economists, Wall Street analysts, some Federal Reserve Bank officials, they come together for a retreat at a place called Leen's Lodge up near the Canadian border. They debate the state of the economy, they think big thoughts and they do some fly fishing.

UNIDENTIFIED MAN #1: So, where is the future's (unintelligible)?

UNIDENTIFIED WOMAN: Ninety (unintelligible).

UNIDENTIFIED MAN #2: Up ninety (unintelligible)?

ARNOLD: But Friday morning, nobody was fishing. They were leaning forward around their laptops and a television to get this latest jobs report.

UNIDENTIFIED MAN #3: Hundred and sixty-three thousand.


ARNOLD: The clapping wasn't really all that rowdy, in part because the numbers were better but still not great. The economy was gaining well over 200,000 jobs a month at the start of the year, but then it sputtered. Stuart Hoffman is chief economist of PNC Financial Services Group.

STUART HOFFMAN: Which is not an economy firing on all cylinders, but likewise, this is an economy whose motor has not conked out.

ARNOLD: Yeah, and what we've seeing for months was every month it was lower, lower, lower, lower.

HOFFMAN: Yes, after decelerating, going down in April, May, June, July is your rebound.

ARNOLD: And while growth is still pretty weak, Hoffman thinks that this latest report throws cold water on the notion that the country is sliding back into the recession - or maybe make that cold holy water.

HOFFMAN: But it really does drive a stake in the heart of what I call the vampire economists, that always are going to find the worst in all these numbers, who've been calling recession, or are always saying there's a recession around the corner. They always just want to suck the blood out of the economy.

ARNOLD: Hoffman thinks that too much doomsday talk hurts confidence. But, of course, just having 8.3 percent unemployment gives many Americans a very good reason for concern, even if they themselves have a job.

CONSTANCE HUNTER: There was a Pew study that said over 60 percent of people know someone who's chronically unemployed.

ARNOLD: Constance Hunter is a former investment officer for AXA Investment Managers.

HUNTER: That affects the psychology of everybody, not just the unemployed.

ARNOLD: And then there's what's going on with U.S. corporations. Give me an example. Make up a company, make up a product, you know.

MARTIN BARNES: Whatever. We are a company that making widgets, you know...

ARNOLD: Martin Barnes is chief economist at BCA Research. He says a lot of companies actually right now have money, they're in pretty good shape, they could be inventing new products and hiring more people, but they're worried about the trouble in Europe or whatever else. And so often they end up saying, well, let's wait six months and see what happens.

BARNES: So, we meet again in six months and we look back and say, you know, we were really right to wait. 'Cause look how crappy the economy's been doing the past six months. Yeah, of course the economy was crap the last six months because we and every company like us sat on their hands. We never hire anyone. If we had gone out and hired people, the economy would have been better. So, you're creating a self-fulfilling trap.

ARNOLD: Barnes thinks that the economy will slowly keep recovering. But then there are those vampire economists, as Hoffman calls them, David Rosenberg, former chief economist of Merrill Lynch, now with Gluskin Sheff and Associates, thinks that unemployment will keep rising.

DAVID ROSENBERG: I think that the broad measures of unemployment are going to be worse a year from now. And all you really have to do is go to the optometrist, get a good pair of glasses and look at the data. The economy is slowing down visibly.

ARNOLD: But there is usually an optimist somewhere in the bunch too.


ARNOLD: Mike Dooley is climbing out of a canoe at the dock. He used to work at the International Monetary Fund and is now with Cabezan Investment Corp. He thinks that we're about to have an unexpected breakthrough in Europe and that that will help the U.S. economy too. So, when you're looking off at this beautiful lake here, casting and using your fly rod, you're actually feeling pretty optimistic.

MIKE DOOLEY: Yes, I am. Well, I sure hope I'm right.

ARNOLD: Chris Arnold, NPR News, Grand Lake Stream, Maine. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.