The good news: The U.S. added 192K jobs in March and the unemployment rate is 6.7%!
The bad news: The U.S. added only 192K jobs in March and the unemployment rate is still 6.7%.
More jobs, but fewer than expected
“We were looking for a higher number, maybe 230k,” says ITG chief economist Steve Blitz. “It’s a spin your wheels economy; it is expanding and that’s better than contracting, but we’re not seeing anything to suggest the economy is going to accelerate to a faster pace of growth beyond 2, 2.5%.”
The new jobs don’t pay a lot
The new jobs include a lot of temp positions (29,000), in sectors that don’t necessarily pay super well: Restaurants (30,000), ambulatory health care (20,000) including home nursing, Construction (19,000).
“It’s a great thing that people are finding employment,” says Blitz, “but they’re not the kind of high wage jobs that are going to generate the kind of spending that many are anticipating.” Including, he says, people at the Federal Reserve.
Some nice things
The number of long term unemployed (people out of work for 27 weeks and over) is down over the month, and the year. In March of 2013 there were 4.576 million long term unemployed people, in March of 2014 there were 3.739 million. In February of 2014 we were at 3.849 million.
The long term unemployed are also making up a smaller percentage of all unemployed people. (35.8% this March compared with 39.1% last March, and 37% in February)
Some major revisions
The Bureau of Labor Statistics adjusted some of its previous estimates. In January the economy added 144,000 jobs (not 113,000 as originally estimated), and in February the economy added 197,000 jobs (not the 129,000 the BLS originally reported).
A milestone and a mile off
By one measure, we have now surpassed the number of private sector jobs we had at the pre-recession peak in January 2008. Back then, the private sector was employing 115.977 million people. In March the private sector employed 116.087 million people.
But that misses some major points.
If you look at ALL employment throughout the entire economy - including the public sector - there’s not nearly as much to celebrate. The pre-recession peak for TOTAL non-farm payroll employment was 138.365 million people back in January of 2008. In March of 2014, we were tentatively at 137.928 million people with fulltime jobs. So we have 437,000 more to go.
Slow to catch up.
Nor should we be happy with reaching the number of jobs we had in 2008. We’ve had lots of new people join the workforce since then. The Hamilton Project (affiliated with the Brookings Institution) keeps track of the “jobs gap,” which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month. Their estimate for when we'll truly catch up to where we would've been? 2020.
Was it the weather after all?
Remember December and January weren’t so hot... neither in temperature nor in jobs. Whereas in November we added 274,000 jobs, in December we added 84,000 and in January we added 113,000 144,000. February wasn’t great either at 129,000 197,000 jobs created. (Strikethroughs represent the original BLS estimates, they revised their numbers in the March jobs report). When those initial numbers came out, a lot of people suspected/hoped the weather was behind the drop in new hires.
Well, after the revisions, it looks like Old Man Winter didn’t slam job growth as much as it looked like at the time. Weather was certainly a part of the dip, but looking at the overall trend it would appear that the economy was growing at a very lukewarm pace to begin with. For the foreseeable future, that's what we're going to be stuck with: 2-2.5% growth, estimates Blitz.