Update, 10:34, 4/6/2012:
As mentioned earlier, we may be at the beginning of another downshift in job growth or March's disappointing report could be an anomalous blip down in a better underlying trend. There's some reason to hope for the latter -- I noted the seasonality issues caused by the mild winter -- but we could also be seeing the impact of higher gas prices on growth, real incomes, and consumption.
Still, you really don't want to build too big a story out of one month, especially when it's off trend. Look at it this way. If you plot the monthly gains in the private sector, as I do in Figure 1 below, you clearly see the March deceleration.
But if you smooth out some of the possible monthly anomalies by taking quarterly averages, and then plot average monthly gains over the past three quarters, you get the clear step function below.
We don't know which is correct. I'd remain about as nervous as I was before. We're adding jobs, but at too slow a clip. We have tools to do something about it, but I'm afraid they come under the rubric of fiscal stimulus, and those of us who would take advantage of low borrowing rates to apply such stimulus right now are in a distinct minority around here.
All's I'm saying is that if it were me, I'd be out there saying:
You know what, America? This monthly jobs report may be a one-off disappointment or it could signal that the job market is doing worse than we thought. Either way, there's too many un- and underemployed people out there.
And guess what else there is out there? There's too many crumbling public schools, too many bad roads, too many water systems, airports, rail lines, and you name it in need of repair. There are too many states and towns cutting back on vital services, laying off teachers, cops, firefighters. Too many homeowners underwater on their mortgages.
So let's marry a problem with a solution here, take advantage of historically low interest rates--a market signal that this is precisely the time to make these investments--and take out some serious insurance against the possibility that the March report is flashing red.
Or something to that effect.
9:26 AM, 4/6/2012: Payrolls surprised to the downside in March as employers added only 120,000 jobs on net, well below the almost 250,000 average monthly gains of the past three months and the smallest net gain since last October. While the unemployment rate ticked down a tenth to 8.2%, that was partly driven by a decline in the labor force (though this number is quite volatile month-to-month). Weekly hours slid a bit as well, another indicator of a dip in labor demand off of the recent trend.
The question, of course, is does this weaker report signal a true downshift in job growth, suggesting the recent acceleration was yet another false start. Since one month does not a trend make, this in unknowable, but numerous indicators suggest March's slowdown may be anomalous. Most industries added jobs last month, though retail trade was a big exception, down 34,000.
Seasonality could be playing a role in the disappointing March results. This past winter was the fourth warmest on record, but how does that play out in the jobs report? Retail trade provides a useful example. Stores that expect less traffic in cold months will downsize their staffs in the winter and boost hiring in the spring. Thus, the seasonal adjusters will add employment to the non-seasonal retail count in the winter and subtract it in the spring.
But in an unseasonably warm winter, stores will move their spring hiring up a few months -- folks who would have been hired in March were instead hired in January or February. In that case, the seasonal adjustment artificially boosts the earlier months and lowers the count for March.
The best way to control for that possibility is to average over the past three months. Given that March data completes the first quarter of the year, average monthly growth in this quarter was 212,000 per month, compared to 164,000 per month in the prior quarter (2011q4). So, smoothing out possible anomalies, we still see a clear acceleration in job growth.
Seasonals may be playing a role, or we may be looking at the beginning of yet another slowdown in employment gains. If so, theories that the U.S. economy is finally entering a self-sustaining recovery will have to once again be put on hold.
This post originally appeared at Jared Bernstein's On The Economy blog.
Follow Jared Bernstein on Twitter: www.twitter.com/@econjared
Richard (RJ) Eskow: Want Jobs? Rescue Homeowners -- and Spend, Baby, Spend
here is a blog post with thoughts from additional economic commentators to give readers a little more color, and not just around a single data point:
http://lairigmarketing.typepad.com/lairig_marketing/2012/04/warning-hazardous-economy-ahead-part-3.html
(actually a 5-part series if interested...)
The country needs to focus in on forcing compliance any way it can, to methods that keep jobs in the mainland, and reduce outsourcing of all kinds. CEOs are out there throwing fundraisers for the likes of Romney, spending a lot of money, when the nation needs jobs, jobs, jobs created, right here in the USA. I think CEOs should be shamed at every opportunity for what they are doing, have done, to the US. It is the rich Wall Street boys, and the CEOs who make or brake a nation. They appear to be trying to destroy this one.
Compare the stimulus to trillions spent on bailouts, trillions in near zero interest loans from the FED. immunity from prosecution from financial crimes.
Imagine if we spent trillions in stimulus, trillions in low interest loans for small business, and trillions in principle reductions for all homeowners.
A shared equally applied bailout out, was never going to happen. Main Street will be collateral damage for the next decade at least.
Creating jobs is not that important.
Why do economists keep ignoring the essential facts here?
1) What about the roll-over of massive amounts (over half our debt?) of short-term debt into higher (perhaps MUCH higher) rates in the near future?
2) This debt is now being purchased by the Fed, not foreign governments... BIG problem!
http://www.thenewamerican.com/economy/commentary-mainmenu-43/11357-fed-is-buying-61-of-us-government-debt
"The failure by officials to normalize conditions in the U.S. Treasury market and curtail ballooning deficits puts the U.S. economy and markets at risk for a sharp correction…
In other words, budget deficits often take years to build or reduce, while financial markets react rapidly and often unexpectedly to deficit spending and debt.
With the Fed continuing to buy U.S. government debt, which keeps interest rates artificially low, when will reality set in? ... the Fed’s attempts to fix the price of money below market rates are likely to have other, perhaps more important, effects. It hides the truth about real market rates from investors, it puts the whole discussion of deficits on the back burner, and allows Congress to continue to ignore the issue and kick the can down the road. At some point, reality will click in and investors, Congress, and taxpayers will discover they’ve run out of road."
I really am amazed how people have always EXPECTED TOO MUCH after what happened in 2008 the biggest Financial Crash since the Depression , and on top of that BIGGEST HOUSING CRASH ever.
THIS was the WORST RECESSION . SO
WHY on earth would we EXPECT the BEST RECOVERY ??????????????????
THIS IS STUPID and FOOLISH to EXPECT the recovery to be great. As Bernanke said it will take 4-5 years more. (said 2010 on CBS 60minutes ) so it will not go back to normal until 2014-15
Even President CLINTON recently said that FINANCIAL CRISIS take a long time .
Besides all this, THIS JOB issue IS a STRUCTURAL PROBLEM
Now , it is SAD that the GOPTers want to SABOTAGE the RECOVERY ......actually it is CRIMINA:L.
Yes, we can juice up the economy. Then we'll get a fast recovery. Then we'll get another bubble. Followed by another crash. The Nation will not survive intact another crash in this generation, the Greatest Generation is quickly passing. Today's American wouldl disintegrate under he pressure of identity politics into tribalism.
"Assuming that the United States continues to use about 24 tcf per annum, then, only an 11-year supply of natural gas is certain. The other 89 years' worth has not yet been shown to exist or to be recoverable."
http://www.slate.com/articles/health_and_science/future_tense/2011/12/is_there_really_100_years_worth_of_natural_gas_beneath_the_united_states_.html
Again like the huge oil reserves..it comes from unsupported claim in investment letters by oil/gas field speculators.. selling stock..
http://www.snopes.com/politics/gasoline/bakken.asp
Known recoverable oil reserves 3 years.
The reserves increase as prices increase, but that does not mean cheaper prices as the cost of the oil goes up inorder to make it economically recoverable.
Also the rate of developng these resources is offfset by the drying up of older cheaper existing sources. so only modcest gains will be seen in supply. and then a sharp decline will begin.
Regards
Nice post by the way.
drilling is down of federal lands..obama could reverse that tomorrow...
People take the data as "hard" data, when it actually is only a survey of a limited number of people and employers which is used to make projections for the entire populace, thus small swings in the survey data can results in big swings in the reported numbers.
The ADP data is much more reliable and more consistent with retail sale increase in March. Watch for upward revisions after the excitement goes away.
Just asking.