Jobs and the Economy

The 313,000 jobs created in the last three months are hardly enough even to keep up with population growth, which on its own adds about 150,000 people to the labor supply each month. Though wage growth picked up in July, salaries are still treading water. Average hourly wages of production workers and nonmanagerial service employees are 2.5 percent above what they were a year ago, not quite enough to keep up with inflation.

Consumers have supported the economy almost single-handedly over the last two years, spending the proceeds from tax cuts and borrowing to refurbish their homes and to buy cars and other durable goods.
But the effect of the tax stimulus is waning. As interest rates rise, the resulting costs are reining in mortgage refinancing and other household credit growth. From now on, workers' spending will depend more on wage income.

Against this backdrop, it is perhaps unsurprising that consumers are not feeling great. Last month, the Conference Board's index of consumer confidence - which aims to measure the outlook on jobs and overall economic conditions - fell for the first time since April. According to the International Council of Shopping Centers, sales at stores of the nation's big retailers recorded the slowest growth since June 2003.

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