Job Growth ‘Setback’

The US economy added 126,000 jobs, much less than the guess of 244,000.

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CNN sent out a Breaking News alert a few minutes ago with the lede,

In a setback, the U.S. economy gained 126,000 jobs last month, much worse than expected.

Overall, the American economy has taken some hits this year due to a harsh winter and sluggish growth in other parts of the world. But most expect it to snap back and, over the past year, job creation has been strong.

The Labor Department also reported that the unemployment rate remained the same at 5.5% in March.

Now, I’m not persuaded that “jobs” is the most meaningful indicator, given that someone who lost a job making $100,000 a year landing one making $40,000 a year is a really bad thing from a human standpoint. Regardless, it strikes me as even odder to measure job growth against “expectations,” with it being a “setback” if the growth is smaller than the SWAG that preceded the report.

The fuller CNN report (“Start of a slowdown? U.S. economy only adds 126,000 jobs“):

March was a mess for the U.S. economy.

The U.S. only added 126,000 jobs in March, the lowest since December 2013 and well below the CNNMoney economist survey forecast of 244,000.

The unemployment rate remained the same at 5.5%.

Wage growth stayed sluggish. Average hourly earnings went up only 2.1% over last year. The goal is to see 3.5% or better wage growth. To put that another way, Americans made $24.34 an hour a year ago. That only bumped up to $24.86 an hour now.

Lackluster wage growth is a major reason why many Americans still aren’t feeling the economic recovery — and why they aren’t spending much lately.

The headline and lede are sensationalistic and unhelpful but the rest of the report is more useful. Wage growth and the public mood about the economy are really much more important than how accurate the pre-report forecast was. If the exact same numbers—which will, of course, be adjusted in another few months—had been reported but the prior expectation was only 100,00 jobs being added, would they have been cause for euphoria? If so, why?

 

 

FILED UNDER: Economics and Business, Quick Takes
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. JohnMcC says:

    Pretty good run-down on the less publicized minutia of the report here:

    http://www.newrepublic.com/article/121450/march-jobs-report

    And worthwhile to consider the whole report in terms of a world-wide slowing of growth leading to the US$ becoming more expensive among the world’s currency.

  2. Tillman says:

    The good news: it’s just one report!

    Yay.

  3. Pinky says:

    I don’t have the exact number, but the US population grows by something like 3 million per year. If half of them are in the labor force, that’s just about even at 126,000 new jobs per month. So maybe not a “setback”, but not job growth above population growth.

  4. Dave Schuler says:

    You can’t tell much from one month’s report. Or even three months’. The data are too noisy.

    Additionally, the birth-death ratio is too great a component of BLS numbers. Mostly, they’re just announcing the variations in the fudge factor.

  5. Mikey says:

    @JohnMcC:

    a world-wide slowing of growth leading to the US$ becoming more expensive among the world’s currency.

    Last time I took my family to Germany the Euro was about $1.38. Today it’s $1.10. We’re going again in August.

    While I understand the negative ramifications of a too-strong dollar, I hope it stays there until September at least…everything will be so cheap. A plate of food that cost me $13 last time will cost $10. A shirt that cost $41 will cost $33.

    I’m going to need to bring an extra suitcase…

  6. Regardless, it strikes me as even odder to measure job growth against “expectations,”

    Because a lot of employment is cyclical. Retail employment plummets in January. Ski resorts have much less employment in the summer. etc.

    There needs to be a way to distinguish normal rises or drops in employment from changes due to the underlying economy.

  7. OzarkHillbilly says:

    See? I told you Obama was cooking the books.

    @Stormy Dragon: I thought that’s what “seasonally adjusted” did.

  8. @OzarkHillbilly:

    The 126k number mentioned is the non-seasonally adjusted number though:

    http://www.bls.gov/news.release/empsit.nr0.htm

  9. al-Ameda says:

    More jobs growth? That’s terrible.

    I really miss the Great Recession, especially those months in 2009 when we were losing over 700,000 jobs per month. If only we declined to “bail out” GM, we could have lost an additional 1 Million jobs in the Auto Industry, we’d be stronger today.

  10. Franklin says:

    The headline and lede are sensationalistic and unhelpful …

    Welcome to the Internet, Dr. Joyner!

  11. Tillman says:

    Wu Tang Finance on Twitter was pointing out a decline in the underemployment rate alongside the non-shift in unemployment and weak jobs number growth, so it probably is middling-to-good (“better than nothing”) economic news disguised under a poor lede.

  12. David M says:

    It’s not the kind of good news we’ve been seeing in the reports for the last year, but a single month isn’t bad news either. We’ll just have to see what the adjustment is next month as well as the numbers for the next few months to see where if the current trend actually changes.

  13. Turgid Jacobian says:

    @Stormy Dragon: @Stormy Dragon: No, that is the seasonally adjusted number
    http://www.bls.gov/news.release/empsit.b.htm
    Look at the top right

  14. @Turgid Jacobian:

    Hmm you’re right. The press release confused me.

  15. Turgid Jacobian says:

    @Stormy Dragon: yah, they are

  16. Turgid Jacobian says:

    @Turgid Jacobian: confusing, that is. There are places where their parenthetical seem to be interpretable as to indicate wider applicability

  17. Richard Guo says:

    It may be, as the mass media says, due to the low oil prices and energy sector layoffs combined with a strong US dollar dampening export industries.

    However, I don’t put much credence in isolated monthly job reports, especially as they undergo seasonal adjustment and corrections months later. If this starts to become a sustained trend downwards confirmed on multiple independent surveys, then that would start to become worrisome.