The Labor Department reported the economy added a disappointing 173,000 jobs in August. The unemployment rate fell to 5.1 percent largely because fewer Americans sought work.

Along with recent turbulence in financial markets and fears about the economic slowdown in Europe, this jobs report could delay Fed plans to raise interest rates. Sadly, prolonging low interest rates will do little to further boost the economy.

GDP grew at a 3.7 percent annual rate in the second quarter. The balance of this year and next, the pace is expected to moderate to 2.6 to 2.8 percent, but that is still considerably better than the first six years of the economic recovery.

Economists expect low interest rates to boost growth by encouraging consumers to purchase more big ticket items like new homes, appliances and automobiles, and businesses to finance new investments in plant and equipment.  However, those sectors have largely recovered from the Great Recession and no longer need support from rock bottom rates.

The expansion of business investment remains weak by historical standards but that has a lot to do with structural shifts in the economy. For example, a single 3D printer can create prototypes and fill small batch orders for customers in many different industries. Replacing many machines with one lessens the need for larger capital outlays to support growth.

Business investment has shifted away from structures and machines toward more R&D and software design. The latter are inherently more speculative than adding a lathe or a drill press and are not as easily financed through bank loans. Instead, businesses rely more on cash flow to finance investments in knowhow and for many startups, the sweat equity and lean living circumstances of hungry entrepreneurs.

As economic growth becomes increasingly powered by the more efficient use of machinery and new ideas, low interest rates become a less potent tool for boosting business investment and stimulating the economy.

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