By Andrew L. Jaffee

With American job growth still strong, some prognosticators are stating, “Payroll gain of 113,000 misses forecasts for fourth straight month; unemployment rises; wages up.” I mean, c’mon: About 5 million jobs have been created since August 2003. As my dad used to say, “Whadaya want, blood?” Rather than impending doom, a slowing in the number of jobs created is good news, in the sense that the American economy is cooling to a more sustainable rate, and probably will convince the Federal Reserve to stop its lengthy chain of interest rate increases. The U.S. Bureau of Labor Statistics yesterday announced that:

Total nonfarm payroll employment increased by 113,000 in July, and the unemployment rate rose to 4.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains occurred in several service-providing industries, including professional and business services, health care, and food services. Employment also rose in mining. Average hourly earnings rose by 7 cents, or 0.4 percent, in July.

CNNMoney reported:

Job growth came in weak for the fourth straight month in July while the unemployment rate rose, according to a government report Friday that could give the Federal Reserve reason to pause in its two-year-old campaign to raise interest rates.

The economy added 113,000 jobs in July, the Labor Department said, down from a revised gain of 124,000 jobs in June. Economists surveyed by Briefing.com had forecast 145,000 new jobs.

The unemployment rate unexpectedly rose to 4.8 percent from 4.6 percent. The last time the unemployment rate was this high was in February, the Labor Department said. Economists were expecting no change.

If economists’ predictions were ever accurate, they would all be multi-billionaires. This is the key:

“At this point the Fed has to be careful because current policy is going to affect the economy six months down the future. It would be prudent for them to pause to see if the economy continues to see signs of slowing,” Global Insight’s Bethune said.

The Fed has been on a tear, raising rates continually because of inflation fears. My experience is that the Fed almost always over-compensates in reaction to economic numbers, pushing rates too low when the economy stumbles, and forcing interest rates too high when the economy booms.

If only we could teach the Fed some Zen, and get it to act with moderation…