Today’s jobs report was not good. From December to February, net job creation surpassed 200,000 per month — and while estimates vary about how many new jobs are needed each month simply to keep pace with population growth, pretty much everyone agrees anything north of 200,000 is good news. But in March, the Bureau of Labor Statistics’ initial estimate is a disappointing 120,000. That was the worst monthly showing since October, and the worst figure for March since 2009. It doesn’t represent the kind of growth that heralds a reinvigorated labor market.
What's up with the economy?
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The unemployment rate fell to 8.2 percent from 8.3 percent, but that had a lot to do with people giving up on finding jobs and exiting the labor force. At this stage of an economic recovery, people ought to be rejoining the labor force as they see an uptick in hiring.
Now, the dip in March could be a blip on the way to better news in the months to come. [Whoops: Meant to include the following sentence and link in the original post but got trigger-happy with the "publish" button. -- KW] After all, new claims for unemployment benefits fell last week to a four-year low and for weeks now have been hitting numbers that suggest stronger hiring. Or the March jobs figures could be a sign that, like last year, when strong jobs numbers from February to April were followed by dismal showings from May to August, the burst of stronger hiring was the blip.
Which raises a question: Is the economy really recovering?
CNBC’s report on the jobs numbers included this section:
The slowdown in employment growth last month likely reflected the fading boost from unseasonably warm winter weather. It supported the caution on the labor market from Fed Chairman Ben Bernanke last week.
Bernanke expressed doubts the recent job gains could be sustained, and March’s weak report was in line with expectations that economic growth slowed to an annual pace of 2 percent in the first quarter from the 3 percent rate in the October-December period.
First, “warm winter weather” is not the kind of thing on which one wants to pin one’s hopes of economic growth. Second, annualized economic growth of 2 percent is below the country’s long-term trend rate and would not be a good development. Peter Morici, an economist at the University of Maryland, explained the downshift this way: “Fourth quarter economic growth was exceptionally strong as the global economy recovered from first half disruptions such as the earthquake in Japan, but first quarter growth has been slower.”
Now, 3 percent annualized growth in one quarter is only “exceptionally strong” by our “new normal” standards, not our traditional pace of recovery after recessions. And Morici’s explanation suggests the economy was catching up more than ramping up from October to December.
So, here’s this week’s Poll Position question: Is the economy really recovering, or just treading water? Answer in the nearby poll and in the comments thread.
– By Kyle Wingfield