Justin Wolfers on August's Dismal Jobs Report

So the jobs numbers from August are out and they’re not pretty. Employers added no net new jobs last month, the first time that’s happened since February 1945. In early trading, the Dow is down some 200 points.
Thankfully, today is a heads day for Justin Wolfers in his Twitter experiment, which he’s been at for a month now (Follow him @JustinWolfers). As soon as the numbers hit the fan this morning, Wolfers posted some brief thoughts to Google+, which we share below:
 

 

Justin Wolfers –  9:26 AM –  Public

Latest job market report:
– Non-farm payrolls unchanged (+0 jobs!)
– Unemployment rate unchanged at 9.1%
And we’re all disappointed. Wait for the headlines: “Economic numbers unchanged” and “Economy going to hell”. Both are true. All told, a nice teaching moment about the importance of expectations. 
There are two ways of reading a report like this:
1. How is the economy performing?
Terribly. Over the past three months, average jobs growth of +35k is dismal.
2. What is the news from today’s report?
Forecasters had expected jobs growth of +70k. The failure of these jobs to appear is why markets are falling, and there’s more doom and gloom commentary.
But I think this is a mis-reading. While the establishment survey showed no job growth, the household survey says employment rose +331k. If you put 20% weight on the household survey and 80% weight on the payrolls survey (which is roughly reasonable), this says that true employment growth was roughly consistent with market expectations.
Bottom line: There’s not a lot of news here. The economy is very very weak. Probably not shrinking. And definitely not growing fast enough to reduce unemployment. But we knew that yesterday.
The Fed has been behind the curve on all of this, so it does substantially increase the chances of monetary easing in September.