The Painfully Slow Recovery Continues

The economy added 157,000 jobs in January and the unemployment rate ticked up slightly to 7.9%. Using the Hamilton Project’s jobs calculator, Plumer finds that, if “the United States keeps adding 181,000 jobs per month [the average during 2012] then it will take nine years and three months to get back to full employment”:

With faster jobs growth, the country could get back to full employment even quicker. The Hamilton Project calculatesthat we could close the jobs gap entirely by the 2016 election if the economy added 321,000 jobs per month. The problem? That was the average rate for the best single year of job creation during the 1990s dot-com boom. Hard to envision now.

Greg Ip also puts the report in perspective:

[E]ven if the current pace is maintained, it’s still inadequate for an economy still so far from its productive potential. There is nothing in the report to deter the Federal Reserve from continuing to buy bonds with newly created money (quantitative easing). David Greenlaw of Morgan Stanley reckons that if job growth continues at 175,000 per month and the labour force participation rate remains steady, the unemployment rate won’t fall to 6.5% (the Fed’s threshhold to consider raising rates) until early 2017. If job growth picks up to 200,000 per month, it will happen in January, 2015.

Neil Irwin’s view of today’s numbers:

Nothing about the new jobs numbers, then, should radically transform anyone’s assessment of how the U.S. economy is performing. Job creation is steady and strong enough to bring the unemployment rate down over time — just not very quickly. The January unemployment report was, more than anything, affirmation of that fact.

Felix Salmon’s related thoughts:

To be honest, this month’s payrolls report probably isn’t even the most important data release of the day, let alone the month: the data from the manufacturing sector of the US economy is much less ambiguous, with the ISM report coming in strong and GM sales looking impressive. It’s an open question, of course, as to whether and how industrial strength is going to make its way through into full employment. But don’t look to the headlines atop this month’s payrolls report for answers. If they’re in there at all, they’re deeply buried, and not easy to find.

Bouie focuses on the revisions in today’s jobs report:

 November’s job growth was revised to 247,000 (up from 161,000) and December’s was revised to 196,000 (up from 155,000).  These are big revisions, and when analyzed as part of a trend, it’s clear that the government was been underestimating job growth for most of 2012, to the tune of 28,000 jobs a month. It should be said that this makes Barack Obama’s re-election victory even easier to explain. If the president’s standing was higher than expected, it’s because economic conditions were much better than we thought.