After a post-bubble recession and hangover and a short but robust recovery, the U.S. economy seems to have settled into a precarious balance.
There's enough growth to keep the unemployment rate from falling while allowing businesses to post respectable gains in sales and profits. But, at the same time, there's not enough growth to produce many new jobs, or put upward pressure on wages or even generate much excitement among investors on Wall Street.
All this was underscored last week as the government reported that a disappointing 96,000 new jobs were created in September, along with a modest downward revision in the figure for August. The report showed continued weakness in manufacturing and retail trade, with fully one-third of the increase recorded by temporary service agencies, with much of the rest in interest-sensitive home-building and construction.
The lackluster government report was reinforced by more layoff notices from a number of big corporations, among them AT&T, Bank of America, Unisys and Global Crossing. There were also signs that higher gasoline prices were once again beginning to cut into consumer spending, with even such strong retailers as Wal-Mart and Gap reporting disappointing gains in September sales and a number of department-store chains falling behind last year's numbers.
Meanwhile, stock prices continued to move sideways, up one week, down another, but in the end about where they started the year. This ambivalence reflects not only the normal adjustment that comes when corporate profits look to be rising at 10 percent a year rather than the 20 percent of some recent quarters. But also weighing on the market is the steady rise in oil prices, which ended the week at $53 a barrel, a new record.
In fairness, this isn't all bad, signaling a return to the kind of normal growth rates that would have been welcome before the boom years of the 1990s altered economic expectations.
But in the eyes of some economists, the recent "soft patch" may not be so temporary. Rather, results from the continuing, unresolved imbalances at the core of the economy that are given numeric expression by the persistently high level of household indebtedness and record trade and government budget deficits. Until these imbalances are corrected, these analysts warn, another period of sustained, robust growth is unlikely.