May 24, 2024

Economix: Looking Ahead to the Jobs Report

Maybe, just maybe, this is the month the job number pops.

The March job report will be released Friday morning, and quite a few economists, to the extent that they can be drawn into such discussions, are betting on a number just short of 200,000.

It’s not hard to understand that bet. The weekly unemployment claims have declined steadily, from the mid-400,000s to the neighborhood of 385,000. In almost any other context, the latter would be a grim number indeed. But in this slowest and most sluggish of recoveries, it is a sign of somewhat fewer layoffs.

And the unemployment numbers for February offered signs of hope as well. The economy added 192,000 jobs, and the 12th consecutive month of gains by companies. A comparable gain in March would provide the strongest two-month performance since last spring, when short-term Census hiring was driving the trend and private sector hiring was still weak.

“I suspect tomorrow will be the first time I use ‘traction’ and ‘momentum,’ ” said Heidi Shierholz, an economist at the liberal Economic Policy Institute. “I suspect that the workers on the sideline will start coming back in.”

This could lead to a paradoxical moment, however, as the unemployment rate might rise even as jobs are added. It now stands at 8.9 percent. The explanation goes to the size of the work force, which has steadily diminished for several years. Just 64.2 percent of adults are either in the work force, or looking for a job; that’s the lowest labor participation rate in a quarter-century.

Many Americans, in other words, have given up hope of finding work in this most terrible of economies, and survive on a spouse’s salary or savings. And they wait and hope for an upturn. “The unemployment rate may go up, but the bad news will be the good news,” Ms. Shierholz noted. “It will mean people feel better about getting back into the economy.”

The larger question is what the medium-term future augurs. Will the job force continue to expand through the spring, and perhaps start to add jobs with enough vigor — 300,000, say — to reduce the unemployment rate substantially? As Ms. Shierholz notes, if the economy adds 200,000 jobs a month, it will be 2019 before it reaches the same employment rate as before the Great Recession started. (Since the recession began in December 2007, the economy has shed 7.5 million jobs.)

Many economists speak optimistically of the spring, but the outlook grows uncertain after that. The international storm clouds are many, from spectacular debt problems in Europe to revolution sweeping the oil-rich Middle East to Japan and its many maladies. And then there is the possibility of a government shutdown in Washington, as the Republican House challenges the White House.

Some of the problems arising from these storms, such as higher oil prices, could take a while to work through the economy and, possibly to erode consumer confidence.

“The first half of this year will be the best job market that we’ll see in this whole expansion,” said David Levy of the Jerome Levy Forecasting Center. “We’re riding the crest of earnings. “But after that, and looking toward 2012, the situation is very questionable.”

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