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01.06.12

Felix Salmon: Finally, a Jobs Report With Really Good News

Friday’s jobs report may not show an economy on fire, but it does show unemployment falling to a three-year low—and Felix Salmon is no longer worried about us falling below stall speed.

File this one under “unmitigated good news”: America’s employment situation turns out to have been rosier, at the end of 2011, than anyone had dared hope. There were 200,000 more people in work last month than there were in November, and the unemployment rate—by far the single most politically important macroeconomic statistic—fell to 8.5 percent, the lowest rate in three years. All data series are noisy, of course, and we’ll surely see volatility in this one over the course of 2012. But it really does seem that there’s a bit of fire in the American belly right now, and that things are going to continue to get better over the course of this year unless and until some new crisis comes along.

The cheer is spread all over this report. The broadest measure of underemployment, U-6, fell sharply to 15.2 percent, again a new three-year low, and down two full percentage points in two years. The unemployment figures more generally are now beginning to look as though they’re in a downward trend, rather than every good month being offset with a subsequent disappointment. I’m not worried about an economy falling below stall speed anymore—there’s a world of difference between this report and the gruesome one we were initially presented with four months ago. Back then, it seemed like nothing could get Americans back to work: now, with political gridlock as far as the eye can see through 2012, it seems that America has got used to nothing and is has worked out how to grow anyway.

Of course, the long-term problems remain long-term problems, including the number of people unemployed for more than six months or a year, and the overall percentage of the population that has a job. None of those numbers moved significantly, and none are likely to any time soon. They’re not things that get changed by a month-long bout of hiring: they’re deeply engrained in the economic structure of the country now and are likely to prove stubbornly resistant to change.

But for the majority of us who are working now or who have had a job in recent months, things are looking relatively rosy. Average weekly earnings rose to $799.46, continuing a steady upward rise. And there’s even hope that the painful public-sector layoffs might be coming to an end: while we now have 280,000 fewer government employees than we did a year ago, that number was pretty much unchanged in December. (Or maybe it’s just that even the government has a little heart, and doesn’t like laying people off right before the holidays.)

There’s a world of difference between this report and the gruesome one we were initially presented with four months ago.

Is this a fantastic report? No: as Betsey Stevenson says, an economy on fire could and would add 400,000 jobs a month, rather than 200,000. But no one’s kidding themselves that this economy is on fire. The main thing is that it’s growing, that things are moving in the right direction, and that we’re well above stall speed. If we stall, remember, there’s no safety net: the chances of any kind of fiscal stimulus in 2012 are exactly zero. So we’re on our own, here. And, happily, we seem to be doing OK.