A Different Take on the Jobless Figures

By March 7, 2008Economy

From First Trust Advisors, L.P., Data Watch:

Implications: Today’s report on payrolls is disappointing but not nearly as bad as many are making it out to be. Reports on layoffs in February ran below the level of February 2007 and unemployment claims are not signaling recession. What we have is a temporary hiring freeze at many firms in response to fears of a recession, not the kind of layoffs that occur during actual recessions. In addition, the February number may have been influenced by heavy snow that covered much of the US, particularly in the Midwest, which contains much of our nation’s manufacturing sector. This was layered on top of another understandable 26,000 loss in home building jobs. The overall decline in payrolls in February is the second straight monthly drop, which rarely happens outside recessions. However, this is the first business cycle in history when Baby Boomers have started to retire. Negative payrolls in the 1980s and 1990s would have been a very bad sign given trend payroll growth of 200,000+ per month. In a world with trend payroll growth near 100,000, payroll declines are less indicative of recession. Also, the recent weakening in the labor market resembles the acceleration of post-recession job loses in early 2003, as fears mounted about the war with Iraq. That weakening was temporary, and we expect recent weakness to be temporary too. We were glad to see the unemployment rate tick down to 4.8% and note that the measure of the unemployment rate that includes “discouraged workers” also ticked down.

(Hat tip: Ramesh Ponnuru.)

Join the discussion One Comment

  • Biggy says:

    Of all the idiotic things I’ve read here this takes the cake. Manufacturing dropped 59,000 (not mentioned here in this National Association of MANFACTURERS article), construction declined 39,000 yet ridiculous government job went up 38,000. Take away the wasteful government jobs and the losses are at 100,000. And you celebrate the 4.8% unemployment as the U.S. shed jobs? Please explain how the overall jobs figure can decrease and carry unemployment with it. It means more people are dropping out of the workforce as they have given up on finding work. You absolutely can not paint this as a rosy picture.

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