Is the U.S. economy improving, or are we still struggling with recession? After a close look at the most recent jobs numbers -- released last week while the stock market was closed for Good Friday -- the answer to that question is definitely "yes."
In other words, depending on exactly how you look at it, the labor market is telling us that there is a real recovery getting started. But at the same time it's telling us that things are as bad as ever.
Since the report the stock market has crept up to new recovery highs. But it doesn't seem to be running away to the upside. Stocks seem to agree that the economy is still touch-and-go.
Let's take a closer look at the jobs report.
On the plus side, with 162,000 net new payroll jobs in March, we had the first triple-digit gain in payrolls since November 2007. That's true even if you take away the 48,000 temporary jobs generated by the 2010 census.
That said, this puts us only one month off the lows. As of February, just one month before, we'd lost 8.363 million jobs from the pre-recession peak. The number was the same in December, after which a small gain in January gave us a false start. Was March's gain another false start? Who knows, but it's an indisputable fact that we're really only one month of the very bottom.
But there are some clues that this one data-point could nevertheless be the signal of a new upward trend in jobs. Jobs in the private sector -- in other words, jobs outside of government -- have been growing now for three months, not just one. True, the private sector has been the recipient of a lot of government "stimulus" money, but there's still a difference between a real job created by a real company, versus a make-work job created by the government.
So three months of growth does tell a good story.
The problem is that the jobs market is like a leaky bucket. Yes, we're beginning to pour water into it. But it's so leaky, the water level isn't rising. What I mean by that is that it's not enough to create new jobs. We have to create enough new jobs to make a difference, and so far we're not doing that.
You can see evidence of that in the unemployment rate. It's off from its high of 10.1% last October, but only down to 9.7% -- which is still a horrible number. But what worries me is that the unemployment rate went up this month, not down. It wasn't enough to change the headline number -- it was reported as "unchanged." But it was actually up, and that's moving in the wrong direction.
How can the unemployment rate rise when new jobs are created? Simple. The rate is calculated by taking the number of unemployed as a fraction of the labor force, which is defined as all the people either working or looking for work. Even when more people are working, the number of unemployed can still rise, if new people enter the labor force looking for a job but unable to find one.
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