Hiring stalled in Sept. ahead of shutdown

Amid uncertainty, Fed may opt against taper of stimulus

Luis Chiliquinga was laid off from his job at a McDonald’s restaurant inside the National Air & Space Museum in Washington during the government shutdown. The effects of the shutdown are expected to be seen in October reports.

J.M. Eddins Jr./The New York Times

Luis Chiliquinga was laid off from his job at a McDonald’s restaurant inside the National Air & Space Museum in Washington during the government shutdown. The effects of the shutdown are expected to be seen in October reports.

NEW YORK — 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 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 snapshot is released 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 almost since the recession ended in 2009, 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.

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

The relatively weak September numbers, the subsequent fiscal showdown, the lack of available data, and the economic distortions created by temporarily closing government offices are all expected to further delay the Fed’s decision to begin scaling back on some of its efforts to stimulate the economy.

While the Federal Reserve has been trying to promote growth, the rest of Washington has largely been working in the opposite direction, analysts said, with Congress creating drags on the economy through resumption of a payroll tax that began in January, the across-the-board budget cuts known as sequestration that began in March, and then the partial government shutdown and debt ceiling crisis in October. The result has been to accelerate a longer-run trend of a shrinking federal workforce; in September, the federal government had the lowest number of civilian employees on its payrolls since 1966.


The pace of employment growth in September was slower than the average rate over the previous year, which was 185,000 jobs a month. The unemployment rate fell to 7.2, from 7.3 percent the previous month, a change that was not statistically significant.

Other details of the report were lackluster. The length of the average workweek and the share of Americans actively engaged in the labor force both remained flat.

The biggest net hiring gains in September were in construction, wholesale trade, and transportation, and warehousing.

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