We have had a relatively favorable view of the economy and tend to view the U.S. economic glass as half-full instead of half-empty. However, the combination of last week's slow employment report, this week's job openings report, and slowing in some of our favorite growth sectors (autos, airliners, and shale oil and gas production) is making even us a little worried. Some caution seems warranted. The softness may, however, merit lower rates for longer, which could cheer markets.

last week's employment report for August. Although most economists agreed that the headline job gain of 151,000 looked a little soft versus expectations of 180,000 or so, it certainly was no disaster, especially for the accident-prone month of August. Most analysts focused on the fact that the number might be low enough to keep the Fed from raising rates. A few others noted that hourly wage growth year over year decreased from 2.7% to 2.4% between July and August, also potentially quelling potential Fed Fears.

However, we think these analyses miss the real point, which is that combining slower overall employment growth with the shrinking hours worked paints a relatively bleak picture, if not quickly reversed. Employment growth has been relatively stable this recovery, averaging about 2.1% since 2011, while employers have adjusted weekly hours to smooth normal ups and downs caused by weather, strikes, and normal swings in the economy. Still, we have warned that employment growth had slowed some, with year-over-year averaged employment growth dropping from 2.3% last August to a more modest 1.9% this August. We noted that given slowing GDP growth, the drop wasn’t all that surprising.