In recent years, the U.S. economy has performed like a once dominant, but now aging ballplayer. It shows flashes of greatness, but the risk of injury looms large. Last winter, for instance, the job market started the year with a bang, adding roughly 275,000 jobs per month. But sometime last spring, it pulled up lame — at one point the three-month average of job gains stalled to 108,000, possibly not even enough to keep up with population growth.
But if this month’s jobs report is any indication, the economy is managing to avoid the disabled list this year, despite the risks from higher taxes, lower government spending, and economic weakness around the globe. The Labor Department announced this morning that the U.S. economy added 165,000 new jobs and that the unemployment rate fell slightly to 7.5%. More important, the previous two months of employment gains were revised upwards: February job growth was estimated to be 332,000 rather than 268,000, and March job growth was revised from 88,000 to 138,000. In other words, there are 279,000 more jobs in the economy this month that we had previously thought.
The report showed strength in other ways as well. Average hourly earnings rose last month by four cents to $23.87, which brings the increase so far this year to 1.9%, more than enough to keep pace with inflation. On the other hand the average length of the work week decreased by 0.2 hours, indicating that while employers have hired more, this may be eating into the hours of the already employed.
The politically inclined will surely be parsing today’s report for effects of the so-called “sequester” as well as the various tax increases that have gone into effect this year. Conservatives will likely point out that there isn’t much evidence in this month’s numbers that government cuts are worsening the employment picture, as government employment remained steady. That being said, most of the sequester is taking the form of furloughs rather than outright job cuts, and the effects of those changes could be more visible in data like retail sales, which have recently shown weakness.
In the end, this month’s jobs report was basically more of the same. Over the long run, you’re not going to get all-out job growth unless you see corresponding increases in economic output. And for now, economic growth is hanging tough at 2% or so. And over the past 12 months, we’ve seen average monthly job growth at 168,000, which is about what you’d expect given that kind of GDP growth. These kind of figures are above what is needed to keep ahead of population growth, but only slightly.
At the same time, this is actually somewhat impressive, given the fact that the U.S. Congress, through ham-handed budget cuts and ill-timed tax increases, has done its best to actually slow growth. The fact that the economy is able to take these hits and remain standing is room for optimism. This old ballplayer may just make it through another season after all.