The Beginning Of A Real Recovery?

Jobs Report

The economy added 236,000 jobs last month and the unemployment rate ticked down to 7.7%. Derek Thompson calls this “the most optimistic jobs report of the recovery”:

We added more construction jobs in February than any month since the Recession. If the numbers hold up — big if, you might say, but I’m just going off today’s stats — it will be the single best month for construction jobs added since March of 2007 and the third best month since 2006! The housing market is sort of (fingers crossed) on a roll. When it comes to recoveries, not all industries are created equal. A retail recovery is nice to have, a food services recovery is nothing to sneeze at, but when housing comes back, a recovery starts to really look like a recovery.

Jared Bernstein thinks “it’s too soon for the sequester to be seen in these numbers”:

The question is not whether the sequester will hurt—it’s likely to reduce growth by about half-a-percent and kill a bunch of jobs too.  The question is “off of what base?”  If the economy can strengthen such that it’s growing 2.5-3% this year then 0.5% slower growth still means at least slowly declining unemployment.  But if underlying GDP growth is 1.5%-2%, the impact of the sequester could be such that we’ll longingly look back on reports like today’s.

What Neil Irwin is hearing:

Robert Dye, chief economist of Comerica bank noted that auto sales and home sales data are both pointing toward economic growth, suggesting the private sector is so far powering through despite tighter fiscal policy. “If we can keep the labor market momentum up for the next few critical months, as fiscal tightening continues, many other good things will happen,” Dye said in a research note. “Solid hiring is the antidote to fiscal tightening. We got a dose of the antidote in February. More is needed.”

Floyd Norris notes that the government still isn’t adding jobs:

For the 31st consecutive month, the number of government jobs in February was less than it had been a year earlier. There is an employment recovery, but it is confined to the private sector. The only comparable period in government data, which goes back to 1939, came after World War II, when the government was shrinking for a very good reason. The year-over-year string of declines ended in December 1947 at 30 months. So we have a new record here — a record being set largely because governments, particularly local ones, have been squeezed by a dearth of tax revenues.

Yglesias picks up on the same trend:

[I]n my opinion the story of the recovery continues to be the “rebalancing” of the American economy toward more people working in the private sector and fewer people working for the government. This months 236,000 new jobs turns out to have included 246,000 new private sector jobs and a loss of 10,000 public sector jobs. Most months the overall numbers have been worse than that, but the general pattern is the same. You hear about this some from liberals who wish the federal government were doing more to bolster state and local governments, but I wish we’d hear about it more from conservatives. This is, presumably, the outcome they want. Are we laying the foundation for supercharged growth in years to come through this rebalancing?

Ryan Avent wonders whether the good news will continue:

The biggest uncertainty concerns whether improvement will continue. The American economy has been here before, after all. Indeed, hiring early in 2012 was considerably stronger than it is now. Despite the relatively strong run of employment growth since November, year-on-year employment gains are well below the best performances of the recovery to date. For employment increases to continue, economic growth must pick up. In the past half year, GDP growth has been only mildly positive. And while the payroll tax increase seems not to have slowed consumers too much, there is time yet for the spending cuts in the sequester to do damage (and there are more budget battles ahead). When all is said and done, fiscal tightening in 2012 will prove substantial, making it hard for hiring to generate much momentum.

Felix Salmon throws some cold water:

All is not entirely sweetness and light, though, as Brad DeLong and many others have noted. The number of multiple jobholders rose by 340,000 this month, to 7.26 million — a rise larger than the headline rise in payrolls. Which means that one way of looking at this report is to say that all of the new jobs created were second or third jobs, going to people who were already employed elsewhere. Meanwhile, the number of people unemployed for six months or longer went up by 89,000 people this month, to 4.8 million, and the average duration of unemployment also rose, to 36.9 weeks from 35.3 weeks.

And Daniel Gross is more upbeat:

Compared with a year ago, there are 1.966 million more people with payroll jobs. They’re working about the same number of hours but at slightly higher wages, up 2.1 percent from February 2012. These gains aren’t nearly good enough to recover the losses suffered from the Great Recession, but they represent real progress.

(Chart from Calculated Risk.)