FORTUNE -- The monthly jobs report released Friday was better than expected, but anyone who thinks this means the Federal Reserve will start slowing down its economic stimulus program is probably overlooking Washington's dysfunction.
Recall in October, Uncle Sam was forced to partially shut down its offices and services after Congress stalled on budget talks. This wasn't all that surprising to the Fed, which expected that lawmakers would have a hard time getting their act together before hitting critical budget deadlines. In September, policymakers surprised Wall Street when they delayed plans for tapering its $85-billion-a-month bond purchase program.
Once again, the Fed may have to prepare if there's another debt fight. The federal government may have reopened for business, but it's funded only through January 15. And the U.S. could hit the debt ceiling again in early February.
True, Washington's stalemate didn't seem to have a negative impact on jobs growth; even though thousands of federal employees were out of work for more than two weeks during the government shutdown, the economy added 204,000 jobs in October -- higher than the average job gain of about 180,000 in the first nine months of this year.
The Labor Department also revised up jobs gains from the summer months. And even though October's unemployment rate rose slightly to 7.3% from 7.2% because of the thousands of furloughed employees, those employees returned to work when the government reopened.
All this might suggest Washington won't destroy the economy after all, but that may be putting too much faith in Congress. A government shutdown is very different from a government default, which economists fear could cause the U.S. dollar to collapse and all kinds of other havoc. And while Congress avoided having to miss its debt payments during the last budget fight, it was still a very close call and there's no assurance a default won't happen if a debt fight ensues early next year.
This isn't to say the monthly jobs report is no longer relevant to the Fed -- policymakers watch it closely to figure out what's best for the economy. However, the Fed has shown that Washington stalemate has become a more immediate threat to the economy than anything the jobs report says. With so much uncertainty still plaguing Capitol Hill, it's hard to see how the central bank will blindly cheer October's employment picture.
Economists at the Fed have come up with a handful of indicators they say are encouraging signs that the jobless rate will continue to fall for the right reasons.
FORTUNE -- As the U.S. unemployment rate falls, skepticism grows about any real improvements in the job market.
The share of jobless workers may have fallen to its lowest level since November 2008, but this comes as millions of unemployed scratch their heads wondering how MORENin-Hai Tseng, Writer - Nov 4, 2013 1:54 PM ET
With the shutdown and holiday hiring, it will be months before we can trust the jobs report again.
FORTUNE -- Employers added 148,000 to their payrolls in September, about 20% less than economists expected and the third smallest monthly increase in the past year. But the unemployment rate dropped to 7.2%, which is the lowest level in nearly five years. And the number of people actively looking for work was MOREStephen Gandel, senior editor - Oct 22, 2013 11:21 AM ET
The Commerce Secretary is happy the government is back open for business but admits there is a lot of work to do.
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FORTUNE -- When Commerce Secretary Penny Pritzker first took the job that had been vacant for more than a year, she put a sign in her office that said "Open for business." Over the course of the government shutdown, her workers turned that sign over. Today MOREOct 17, 2013 10:20 AM ET
According to a study done by the St. Louis Federal Reserve, companies are hoarding cash because of policy uncertainty.
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FORTUNE -- How much is Washington dysfunction harming the U.S. economy? Policymakers' disaccord could be doing major behind-the-scenes economic damage. According to economists Juan Sanchez and Emircan Yurdagül at the St Louis Federal Reserve, U.S. companies are hoarding loads of cash specifically because of policy uncertainty. As a MOREOct 14, 2013 2:06 PM ET
Mike Novogratz, principal of the asset management firm Fortress Investment Group, thinks CEOs need to have a "moral revolution."
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FORTUNE -- Mike Novogratz and the other principals of hedge fund Fortress Investment Group (FIG) became instant billionaires when the company went public in 2007. Like many other uber-rich on Wall Street, their wealth, some of it created by loose monetary policy, has become the target of criticism from politicians MORESep 27, 2013 9:13 AM ET
A new study shows how much the gap between the rich and the poor has widened since the recession. Raising the minimum wage would help narrow it again.
FORTUNE -- Lately everyone from policymakers to fast-food workers have urged Washington to raise the minimum wage. It's a thorny topic that's spawned countless arguments both for and against an increase, but a new study suggesting that mostly the richest Americans are recovering MORENin-Hai Tseng, Writer - Sep 11, 2013 1:15 PM ET
Cheaper labor may bring about more jobs, but workers have less spending power.
FORTUNE -- There's been some good news lately about U.S. manufacturing -- that sector of American industry once considered vital to the growth of the nation's middle class. It's well known manufacturing has been declining for decades, but experts, and some across corporate America, have been saying that many factors signal that factory jobs that have gone to MORENin-Hai Tseng, Writer - Aug 21, 2013 5:00 AM ET
The July employment report shows that the job market for 16- to 24-year olds is worse than you think, and it could have long-term effects for the economy.
FORTUNE – What it is to be young and unemployed in America has been widely reported, but July's report on the health of the jobs market offers a new snapshot of the scale of the problem.
Some economists have argued youth unemployment isn't as bad MORENin-Hai Tseng, Writer - Aug 6, 2013 12:00 PM ET
As long as interest rates rise on positive economic news, as opposed to bad news, the economy will continue creating jobs at a decent pace.
FORTUNE -- The U.S. economy created 195,000 jobs in June, more than most expected. The number of jobs created in April in May were revised upward, and the unemployment rate stayed at 7.6%.
The question now is will the economy continue creating jobs at a decent clip, particularly MORENin-Hai Tseng, Writer - Jul 5, 2013 8:44 AM ET
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