This is a perfect jobs report. Job growth slowed significantly and there are absolutely no signs of inflation. Greenspan may be pulling off what once seemed impossible: two soft landings in one economic expansion.
We're not only stuck in a soft patch; we're spinning our wheels. To get back to full employment, we need a lot more demand, and that's hard to see coming anytime soon from either domestic or international sources.
Many businesses see statistics showing economic growth as a cruel joke. Competition is still brutal, wages are still rising, prices are still flat or falling, and profits are as hard to find as they were a year ago.
Regardless of what happens to energy prices and interest rates, homebuilding is going to happen and that's going to affect the national statistics but not by a huge amount ... it sort of disappears in the context of the national economy.
This big swing in defense spending had to do with mobilizing the National Guard for the hurricanes (in the third quarter), but it still seems implausibly large when you're fighting a war. I'm not 100 percent sure I believe it, and I certainly don't think it will happen again.
The unemployment situation won't truly improve until businesses increase hiring a lot more than they did in February. It takes roughly 150,000 new jobs per month just to keep the unemployment rate steady, as population growth increases the work force.
The retail sales number is perhaps more important than it would look at first sight. Since we're coming so close to the Christmas shopping season when most of the retail sales of the year happen, anything that represents a gauge of consumer sentiment and consumer buying patterns is going to be latched onto by the retail industry as an important indicator.
By mid to late October, you're getting into the fourth quarter, and people are starting to look at their year-end results and deciding whether they can bail out now and still look good for the year. That's going to be as true now as it was (in 1987).
If there is a danger, it is that the report isn't capturing creative and hidden ways employers are boosting wages. I'm sure Greenspan has a sneaking suspicion that these kinds of things are happening and that they may at some point provoke a burst of wage inflation.