EDITORIAL: A false alarm on jobs?(Editorial)

Sep. 12--Four years ago, the Bureau of Labor Statistics surprised experts with a dismal employment report, announcing that 93,000 jobs were lost in the month of August. Most economists had expected an increase, and the news raised fears that the sluggish recovery soon would run out of gas. But the gloomy forecasts proved wrong. Not only did the economy continue to expand, but it grew at a sizzling 8.2 percent annual rate in the third quarter of 2003, the fastest in nearly two decades.

That experience should give pause to anyone who thinks a bit of bad news on jobs means a recession is on the way. But similar alarms were heard Friday after the Bureau of Labor Statistics reported an August loss of 4,000 jobs nationally. Many observers warned of a possible recession, and the stock market sank.

The employment dip was taken as confirmation that turmoil in the mortgage market and the housing industry are upsetting the entire economy. The reaction brought to mind the old line that economists have predicted eight of the last three recessions.

No one would argue that a recession is out of the question, but the evidence suggests the economy can weather trouble in a few sectors without undue strain.

For one thing, it turns out that much of the drop in employment in August came in the government realm and may be a fluke resulting partly from public teachers being off for the summer -- which will be cured by the start of school. Private-sector hiring expanded, though less than expected.

Given the potential for a slowdown, the Federal Reserve Board is able and apparently ready to act. It's now assumed that the Fed will approve a cut in interest rates at its next meeting on Sept. 18, the only question being how large. Chairman Ben Bernanke is ...