Wall Street Journal (09/03/13) Ben Casselman

More than four years after the recession officially ended, 11.5 million Americans are unemployed, many of them for years, with millions more having abandoned their job searches. A growing body of economic research suggests that the longer they remain on the sidelines, the less likely they will be to work again, and for many, it may already be too late.

The share of the population that is working or looking for work—a measure known as the participation rate—stands near a three-decade low. The rate was falling even before the recession, partly because of the aging of the baby-boom generation, but economists disagree about how much of the more recent decline is tied to the weak economy. “People have found other things, maybe staying at home, taking care of family,” says Willem Van Zandweghe, an economist at the Federal Reserve Bank of Kansas City. “You need to see a much stronger economy before they consider coming back.” For economists, the key question is how many of the labor-force dropouts will return when the economy eventually rebounds more strongly. A permanently smaller work force would mean it takes fewer jobs than in the past to bring down unemployment, but it also means the economy’s underlying growth rate has slowed.

MarketWatch (09/01/13) Jeffrey Bartash

The monthly U.S. jobs report will take on extra gravity this week after a bevy of signs implying that economic growth has throttled back. If the net rise in new jobs in August nearly equals or exceeds 192,000—the monthly average in 2013—observers will view it as evidence that the economy continues to expand at a 2% clip. An increase in hiring of that size could spur the U.S. Federal Reserve to scale back its massive economic-stimulus program starting later in September. A disappointing report, however, could keep the Fed on hold. The most probable outcome is another increase in the 150,000 to 200,000 range. Economists polled by MarketWatch project a 165,000 bump, up a touch from a preliminary 162,000 increase in July.

Wall Street Journal (08/31/13) Josh Mitchell

Inflation remains far below the U.S. Federal Reserve’s target as the central bank considers scaling back its bond-buying program, complicating any decision on how to proceed. In the last reading of inflation before the Fed’s Sept. 17-18 meeting, overall prices were up 1.4% from the previous year while core prices rose 1.2%. The Fed’s bond-buying and its promises to keep short-term interest rates low for a long time reflect discomfort that it is failing on both prongs of its mandate—to aim for maximum employment and stable prices, which it defines as inflation of about 2%.

A decision to begin scaling back the extraordinary monetary stimulus will be based on Fed officials’ near-term forecasts for growth, jobs, and inflation as well as their assessment of the risks the economy confronts. The Fed acknowledged concerns about low inflation in its latest policy statement, but it said inflation and economic growth should pick up in the second half of the year as the effects of higher taxes and federal spending cuts fade.