Back to Work

Amid all the dreadful economic news last week—the European meltdown, the insane trading glitch, the oil spill—it was easy to forget just how good the jobs report was. The report is one piece of data, and subject to revision, and you can't make too much of it. But jobs rose by 290,000, with 231,000 of those gained in the private sector. The unemployment rate increased to 9.9 percent largely because people flooded back into the job market.

And the jobs trend is just as encouraging. The Bureau of Labor Statistics revised February and March job numbers upward, from -14,000 in February to +39,000, and from 162,000 in March to 230,000. I have been arguing since December that the combination of GDP growth and unsustainably high productivity figures would lead to strong job growth. Payroll jobs have now risen in five of the last six months, and the pace of growth is picking up steam. March and April 2010 have been the first two consecutive months of 200,000-plus jobs growth since November and December of 2006. (Washington Monthly's Steve Benen's "bikini chart" is starting to look less like a bikini.)

But economists have been slow to catch on to the trend of stronger-than-expected jobs growth, and they are still skeptical of recovery. The Wall Street Journal printed a table showing that of 26 economists polled by Dow Jones Newswires, only four said the economy would create more than 226,000 jobs in April, while 19 said it would create less than 200,000 jobs in the month.

Why are they still behind the curve? Many analysts and market commentators have repeatedly had difficulty foreseeing a recovery given that housing is still poor, consumers are still struggling, and credit still isn't freely available. The reality is that the recovery has taken place in spite of housing, consumers, and credit. It's been led by business, investment, trade, and exports.

Business cycles get into a sweet spot when rising production leads to more jobs, which leads to more consumer spending, which leads to more orders for production. I wouldn't say we're quite there. But the business recovery is beginning to spill over into the consumer economy. Retail sales are coming around. The last piece of the puzzle to fall into place will be housing—still dependent on government support, still plagued by big problems. But there are signs that it may stop getting worse. On Monday, the Associated Press reported that the mortgage delinquency rate—i.e., the percentage of people behind 60 days or more on mortgages—"dropped in the first quarter for the first time since 2006, according to credit reporting agency TransUnion. The 60-day delinquency rate slipped to 6.77 percent, from 6.89 percent in the fourth quarter of 2009." It could be that there are just fewer and fewer people with mortgages to fall behind. Or it could be that, four years after the housing market began to decline, the sector that led the nation into recession may finally be bottoming out.

Daniel Gross is also the author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation and Pop!: Why Bubbles Are Great For The Economy.