December 5, 2020

Job Growth Suggests Resilience of U.S. Recovery

As many corners of the global economy are storm-tossed, with oil prices rising and rumblings of a government shutdown in Washington, economists are watching carefully to see if there will be a cumulative effect on hiring. The answer, so far, appears to be no.

President Obama and the Democrats quickly pointed to the numbers as proof that their policies, from the stimulus spending to the payroll tax cut, are working. Our economy is showing signs of real strength,” President Obama said to applause from several hundred employees at a UPS shipping facility in Landover, Md., where he appeared on Friday. But, he added,  “Although we got good news today we have to keep the momentum going.”

The private sector has added, on average, 188,000 jobs in each of the last three months. Manufacturing continued its unlikely — if still modest — revival in March, adding 17,000 jobs. Health care added 37,000 jobs in the month, and professional and business services added another 78,000, although about 37 percent of that came from increases in temporary help. It was the 13th straight month of private-sector job growth.

In all, the Bureau of Labor Statistics breaks the economy into 16 job sectors. The unemployment rate, while still perilously high in a few, has dropped in 13 of those since March 2010.

“The private sector of the economy has been the locomotive pulling the economy forward,” noted Sung Won Sohn, an economics professor at California State University, Channel Islands. “Record exports, better-than-expected retail sales and the increase in business capital spending are part of the good news.”

At the same time, March’s numbers offer more than a few cautionary signs that the national economy is not cured of all its ills. The ranks of Americans who have been without a job for 27 weeks or more remains painfully high, at more than six million.

The labor force has shrunk steadily since the beginning of the recession, to a point that just 64.2 percent of adults are either in the work force or looking for a job. That is the lowest labor participation rate in a quarter-century. Many economists have expressed hope that as unemployed Americans grow emboldened by signs of new hiring, they will re-enter the work force in greater numbers. That did not happen in March, as the participation rate was unchanged.

“It is still a very inhospitable market for unemployed workers,” said Heidi Shierholz, an economist with the liberal Economic Policy Institute. “We still have five unemployed workers for every opening and those are desperate times.”

The average workweek was also unchanged, at 34.3 hours, and average hourly earnings remained static. Both indicators point to an economy with much slack demand, some hints of deflation, and little upward pressure on wages. In other words, the economy is an engine still coughing. Real earnings, the Brookings Institution noted Friday, have fallen 1.1 percent in the past year.

“With excess supply of labor at very high levels, it is unlikely that we are going to see any meaningful acceleration in wage rates anytime soon,” Joshua Shapiro, an economist at MFR Inc., said Friday morning.

The unemployment rate for blacks and Latinos remains high, at 15.5 percent and 11.3 percent, respectively. (In 2007, the unemployment rate for blacks stood at 8.3 percent and 5.6 percent for Latinos.) State and local governments offer their own slough of despond. Local government has lost 416,000 jobs since an employment peak in September 2008, and shed another 15,000 jobs in March.

Quite a few signs, of late, have pointed to a touch of momentum in the economic recovery. Weekly unemployment claims have declined steadily, from the mid-400,000s to 388,000 last week. In most historical contexts, the latter number would be a touch grim coming so many months after the official end of the recession. But history shows that nations are slow to recover from financial shocks as severe as that of 2008, and many signs now point toward consistent, if still sluggish, growth in hiring.

“I suspect that the workers on the sideline will start coming back in,” Ms. Shierholz said.

The larger question is what the medium-term future augurs, and this month’s report offers less than a definitive answer. Will jobs continue to expand through the spring, and with enough vigor — 300,000 a month, say — to substantially reduce the unemployment rate? As Ms. Shierholz noted, if the economy adds 200,000 jobs a month, it will be 2019 before it reaches the employment rate that preceded the Great Recession.

  Many economists speak optimistically of the spring’s job growth, but some grow wary after that. The international storm clouds are many — spectacular debt problems in Europe, uprisings sweeping the oil-rich Middle East, and Japan with its many maladies. And then there is the possibility of a government shutdown in Washington, as the Republican-controlled House challenges the White House.

The worry is that these ills might press on consumer and business 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 questionable.”

 

This article has been revised to reflect the following correction:

Correction: April 1, 2011

An earlier version of this article mistakenly described the number of long-term unemployed — those jobless for 27 weeks or more — as the highest in a generation.

Article source: http://feeds.nytimes.com/click.phdo?i=dd482b391620510738aaab208d84d488

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