When the Federal Reserve's Open Market Committee met last in June, the most recent unemployment report showed a May gain of 431,000 jobs, following an April gain of 290,000 (each of which were subsequently revised up a little higher). But when the committee reconvenes next week, they'll be faced with a different labor market picture. Om July, the U.S. economy lost 131,000 jobs following a drop of 221,000 in June. This has already led to calls for the Fed to shift ease monetary policy to combat additional job losses. I wouldn't bet on that happening, yet.

First, the Fed economists know better than to trust the headline numbers. Instead, they'll dig a little deeper. This chart isolates private sector job creation this year:

In fact, in June, the Fed already knew that May's private sector hiring had actually fallen. The great number was due mostly temporary Census jobs, the expiration of which are also largely responsible for the awful job losses we're seeing this summer. So really, the Fed probably won't see the picture as much worse. In fact, July had better private sector job creation than May.

Moreover, there's some doubt about how much the Fed's likely method of action would help anyway, considering the economy's current troubles. If anything, there's some possibility the Fed could ramp back up asset purchases, reinvesting the cash from its maturing assets. In fact, the Fed did effectively tighten monetary policy earlier this year through its inaction when it ended it programs to purchase residential and commercial mortgage-backed securities, as well as other asset-backed securities. But what would be the point of starting those efforts back up?

Those programs were important during the financial crisis because the credit crunch had shut down debt markets. Although credit isn't flowing as freely as some would like right now, it's not the real problem. Consumer demand is still mostly what's holding things back.

For example, how many firm executives out there are saying, "Gosh, there is just so much demand for my products out there right now that I wish I could open another factory, but I can't get a loan for the property!" Almost no firms have this problem. Instead, they're saying, "Geez, I wish people were buying more of my products, but as long as they don't -- and I don't expect them to suddenly start anytime soon -- I don't really need to expand or hire."

On the consumer side, the story is much the same. Many Americans are saving or paying down their debt instead of seeking more. Expanding credit would really just make funding cheaper for banks, which would probably just sit on the extra money anyway, since there isn't overwhelming demand for loan volume from businesses or consumers.

There might be other more extreme measures that the Fed could take, but it would really only employ them if its economists have become very worried about a double dip. That's not yet a fate that the labor market clearly foretells. At this point, it looks like we're in an excruciatingly slow recovery, but a recovery nonetheless. If private sector hiring turns net negative in the months to come, however, then that's another story.