The economy may be performing under its potential. But it doesn’t suck. Not with stock markets and corporate profits at record highs, and not with the companies adding a decent number of positions month after month. Indeed, the U.S. economy added 236,000 jobs in February—much better than analysts expected.
Friday morning’s report from the Bureau of Labor Statistics is a sharp rebuke to the blinkered analysts who have been arguing that the fiscal cliff, or the impending implementation of Obamacare, or fears about the sequester, or big deficits, or the perennial bugaboo of “uncertainty,” are hindering job creation.
Looking inside the report, the numbers were generally good. Each month the bureau looks back and revises the numbers it has reported for the prior two months. The December figure, previously reported as a gain of 196,000, was revised up by 24,000 jobs to 219,000, while January’s number, previously reported as 157,000, was revised down by 38,000 jobs to 119,000. In the end, the revisions were something of a wash.
But look at the trend. 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. And the improvement helps support a range of other activities. More people working means more taxes paid and fewer people claiming unemployment benefits. (Compared with a year ago, 1.99 million fewer people are receiving unemployment benefits.)
As we’ve noted, all this is taking a bite out of the deficit. Across the board, Americans are doing a better job at keeping up with mortgages and credit-card debt. So while the payroll tax has taken a bite out of discretionary income, it is being compensated for by more people working and earning a bit more.
The unemployment rate is based on the separate household survey—in which the Bureau of Labor Statistics calls people at home and asks them about their employment situation. It fell to 7.7 percent in February from 7.9 percent in January, in part because the labor force declined by 130,000 and in part because the number of people who said they were working rose by 170,000. The U-6, a measure of unemployment that takes into account part-time workers who would prefer to be working full time and people who have stopped looking, fell to 14.3 percent in February. That’s still elevated, but it is the lowest level it has been since January 2009.
While the payroll tax has taken a bite out of discretionary income, it is being compensated for by more people working and earning a bit more.
A few other things worth noting. Several sectors reported healthy jobs growth, including professional and business services (73,000 jobs), health care (32,000 jobs), the information industry (20,000), and retail (24,000).
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Oh, and in case there was any doubt: housing is back. We’ve been banging this drum for months. But the housing and construction sector, laid low by the credit bust, has been contributing to economic growth for the last several quarters—more home sales at higher prices and more new construction. In February the construction sector added a healthy 48,000 positions.
But the news in the report wasn’t all good. Beyond the still-elevated unemployment rate, austerity once again took a bite out of job growth. For the last three years, in what I’ve dubbed the “conservative recovery,” the private sector has been adding jobs consistently, while the public sector (state, federal, and local government) has been cutting them. That continued. The private sector added 246,000 jobs in February, while the public sector cut 10,000 positions. The reduction had nothing to do with the sequester and everything to do with the continuing grind of muted federal nonentitlement spending, and state and local needs to balance their budgets. The numbers really add up over time. Since February 2010, the private sector has created an impressive 6.35 million jobs. But since May 2010, the public sector has cut 1.148 million positions. The total jobs figures would be significantly higher, and unemployment significantly lower, if not for the continuing austerity efforts.
Paradoxically, under President Obama, there was been a subtle shift in the shape of the U.S. job market. In May 2010, 82.3 percent of the jobs in this country were in the private sector, and 17.7 percent of them were in the public sector. In February 2013, 83.8 percent of the jobs in this country were in the private sector, and 16.2 percent were in the public sector.
Some call it socialism!