CERF Blog
Today’s BLS jobs-report indicates the economy added 243 thousand jobs in January, which was about 90 thousand jobs above the consensus forecast of 155 thousand. Our forecast was 150,000. This gain was accompanied by a fall in the unemployment rate from 8.5 percent in December to 8.3 percent in January. The job-gains were pretty broad where the only sectors down were technology, financial, and government.
The jobs report was a good one in many respects, however, the long-term unemployment level remained at the same level as in January at 5.5 million persons. This is a very large number and it is scary for those who have been without a job for a long time as research shows that it becomes harder and harder for the long-term unemployed to find jobs.
This was a sizable job-gain for a labor market that has been relatively weak thus far in the recovery from the Great Recession. The natural question now is: is this gain sustainable? We have seen 5 months of job-gains in excess of 100 thousand jobs per month and 2 months over 200 thousand. Is this enough data to make a new and stronger trend of job growth?
Or, is this strength, ever-so-welcome, temporary in the face of too many over-riding fundamental economic weaknesses? I remind the reader that during spring 2011 we had three months of greater-than-200 thousand job growth months starting in February that was followed by anemic job-growth from May through August.
At this point, I suspect that the strength is temporary. This is due to a large number of factors. Europe is still not out of the woods, Asia is still looking weaker rather than stronger, U.S. real estate is still weak, household-sector wealth is still down, household-sector debt is still high, personal bankruptcies are still high, and banking is still weak.
In this case, I would not mind being wrong.