The disappointing jobs situation
The general reaction to this morning’s jobs report is “meh”, as you might expect, given the release, where the phrases “changed little”, “about unchanged”, “little or no change”, “unchanged”, and “essentially unchanged” all appear in the first five paragraphs. But that’s largely a function of the fact that the release attacks the unemployment figures first; when it comes to payrolls, they rose by a statistically significant amount — 192,000 jobs, and the trend, while modest, is clearly in the right direction:
Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month.
The really good news in this report is that it’s looking increasingly as though the sharp drop in the unemployment rate over December and January, when it fell from 9.8% to 9.0% in two months, is less of an aberration than it might seem. The 8.9% rate, while undeniably unacceptably high, is the first time we’ve seen an 8 handle on this figure in almost two years. And remember that in October 2009, the number was 10.1%.
Given that unemployment by its nature falls more slowly than it rises, a decrease of 1.2 percentage points in 16 months has to be taken as an indication that something is, finally, going right. (Other unemployment rates, like the much-discussed U6, are also down sharply: it’s now 15.9%, from 17.0% in November.)
Even the worst news of the report, in table A-12, is something of a statistical aberration: while the mean duration of unemployment hit an atrocious new high of 37.1 weeks, that’s mainly because the upper bound for for unemployment duration was changed this year to 5 years from 2 years. The median duration fell, to 21.2 weeks. There’s still an American underclass of about 2.5 million long-term unemployed, but it does seem to be shrinking a little.
As for payrolls, everybody wishes they were growing more quickly. The current pace is far too slow, and isn’t even enough to keep up with population growth. Or, to put it another way, 2011 is a great year for the jobs report to look good, since for demographic reasons it’s the year when the total number of jobs would rise naturally at the fastest pace, thanks to the growing US population. It’s a good idea to mentally compare the payrolls report to the baseline in this chart, which sobers things up a bit.
The big picture here, then, is that the pace of recovery in the employment sector is real but disappointing. And given the new atmosphere of fiscal cutbacks at both the federal and state levels, I doubt it’s going to speed up any time soon.