Is This the Best We Can Do?

More bad employment numbers:

The painfully long and slow recovery of the American economy stumbled last month as employers added a disappointing 162,000 jobs, the government reported on Friday, leaving uncertainty about the timing of the Federal Reserve’s plans to begin tapering its extraordinary efforts to revive healthy growth after the financial crisis that hit the world five years ago.

The unemployment rate, which comes from a different survey, gave a more encouraging signal, edging down to 7.4 percent from 7.6 percent in June. But the improvement was only partly a result of more people getting jobs. More people also dropped out of the labor force. The unemployment rate refers only to people who are actively looking for work.

While the jobs report was lackluster, particularly compared to expectations that the economy might add closer to 200,000 jobs, many economists said the latest data was unlikely, on its own, to cause Federal Reserve officials to back away from plans to begin easing its stimulus policies. Ben S. Bernanke, chairman of the Fed, has said that the central bank would start reducing its monthly purchases of Treasuries and mortgage-backed securities “later this year.” Many Wall Street analysts have interpreted that comment as pointing to action as early as the Fed’s meeting in September.

“The payroll numbers were a little disappointing, but the Fed has said it’s more interested in the unemployment rate than the payroll numbers,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He noted that the Fed’s own forecasts put the unemployment rate around 7.2 to 7.3 percent at the end of this year, not far below the July level. Referring to inflation, he said, “If anything, today’s numbers would harden my view if I were a hawk and persuade me to become more hawkish if I were wavering.”

Not everyone agreed with that view, with several analysts suggesting the Fed might wait until December to take its first step. The mixed signals from July’s jobs report will most likely focus even more attention on August’s jobs snapshot, the last before the Fed’s next meeting, scheduled for the middle of September.

“The committee needs to see more data on macroeconomic performance for the second half of 2013 before making a judgment on this matter,” James Bullard, president of the Federal Reserve Bank of St. Louis and one of the members of the Fed committee that sets interest rates who is more dovish on inflation, said in a speech on Friday.

Other indicators also painted a somewhat darker picture of the economy and the job market than was evident from reports earlier this year, with both average hourly wages and the length of the private sector workweek shrinking modestly in July. The job gains reported on Friday were concentrated in retail, food services, financial activities and wholesale trade, according to the Labor Department. Manufacturing gained 6,000 jobs, the first improvement since February, although economists caution that the timing of auto plant shutdowns in the summer can distort the numbers.

Or, to put matters more succinctly: