Jobs Still Aren't Coming Fast Enough

And the February jobs report didn't help enough.

Here's the thing about expectations: if you keep lowering them, the news starts sounding better and better. And although the February jobs report wasn't terrible, the reaction to it has some of that flavor. 

After a brutally cold month and two months of bad jobs reports before it, observers were holding out hope that job growth would beat the consensus estimate of 150,000 in February. The good news is that it did: BLS says the US added 175,000 jobs last month. So, yes, there is some reason for optimism on the jobs front. The lackluster gains in December and January weren't renewed for a third month, which could very well have spurred the Fed to rethink its tapering schedule. 

It's easy to get excited about the news, but this is only one jobs report. There is a lot of uncertainty around the number because counting jobs across a population of 310 million people is difficult. BLS adds a buffer zone of 100,000 to their estimates, so we could be looking at anywhere from 75,000 jobs (really terrible) to 275,000 jobs (really wonderful). We saw that in this report: revisions to December and January's numbers found a combined 25,000 extra jobs.

A better way to look at the health of the labor market is to follow a longer trend, where we can play down the inaccuracies of the newest report. Below is the 3-month trend in job growth since before the recession started. 

With this smoothed out view of job gains and losses, it's easier to see what is going on. After astounding losses during the financial crisis, the economy has had fits and starts. Just as it looks like we're going to turn the corner and have some healthy gains, hiring slows again. Just look at the beginning of 2011, spring of 2012, and now. The most recent trend is not a healthy one. After steady gains of about 200,000 per month for more than a year, growth is tailing off. I increased the average to 6 months and the results were smoother, but still show a tailing off recently.

At some point we've got to start wondering if the jobs will ever return in force. It's been five years and it hasn't happened yet. Although businesses are growing, I wonder how many of them have learned how to get by with fewer employees, either by pushing more responsibilities onto remaining ones or doing without positions that seem frivolous now.