China’s economy continues to slow down. Fresh data confirms Chinese economic slowdown. “The slowdown in emerging economies is posing a major threat to recovery in the Euro area, the European Commission said as it trimmed its 2016 growth forecast for the 19-nation region.” EU Slashes 2016 Inflation Forecast to 0.5% as Growth Seen Slower. And The U.S. economy slowed to a pace of 0.7 percent in the 4th Quarter of 2015. There are storm clouds gathering on the horizon.
After a sluggish January jobs report last month, the surge in U.S. employment returned in February. Steve Benen reports on the February jobs report. Job growth picks up steam, economy adds 242k jobs in February:
The Bureau of Labor Statistics reported this morning that the U.S. economy added 242,000 jobs in February, well above projections. The overall unemployment rate remained steady at 4.9%, matching a low last seen eight years ago, in February 2008.
Making matters even better, the revisions were also heartening: December’s job totals were revised up, from 262,000 to 271,000, while January’s totals were also revised up, from 151,000 to 172,000. Combined, that’s an additional 30,000 previously unreported jobs.
All things considered, this is a very strong report reinforcing beliefs that the U.S. labor market is resilient and healthy.
Over the last 12 months, the overall economy has created 2.67 million new jobs, which is a very encouraging number. What’s more, February was the 65th consecutive month of positive job growth — the best stretch since 1939 — and the 72nd consecutive month in which we’ve seen private-sector job growth, which is the longest on record.
Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.
In brief remarks regarding the new job numbers, President Obama said “The facts don’t lie. And I think it’s useful, given that there seems to be an alternative reality out there from some of the political folks that America is down in the dumps. It’s not. America is pretty darn great right now.”
Neil Irwin at the New York Time’s The Upshot asks, How Much More Can the Labor Force Grow?
[T]here’s some great news beneath the [jobs report]: Americans are returning to the work force in the largest numbers in many years.
The American work force, according to the Labor Department’s survey of households, rose by a whopping 555,000 people in February. Over the last three months, that number totals 1.52 million, the highest it has been in 16 years. In other words, this winter a lot more people have been either working or actively looking for work.
* * *
The proportion of the adult population in the labor force and the proportion of the population with a job are both up half a percentage point since September. For the first time in years it’s fair to say that these changes are decisively pointed in the right direction.
Just last summer, as the United States expansion entered its seventh year with booming job growth, there was reason to doubt that an improving job market would ever start to pull people in who had become detached from the labor force. After all, if seven years of job growth wasn’t enough to make more people enter the work force, what would be?
We still don’t know for sure how much more room there is to grow. Presumably most people who dropped out of the labor force around retirement age are out of the work force for good, no matter how many job opportunities present themselves. But the data in 2016 will help us find out how much room for expansion there really is in labor force participation.
There is some interplay between the growth in the number of workers and the most disappointing signal in the February jobs numbers, which was a step down in average hourly earnings. Over the last year, this number has risen 2.2 percent, which amounts to a modest rise in pay for American workers thanks to very low inflation. But it hardly suggests the kind of booming economy indicated by the low unemployment rate.
What seems to be happening is the pool of “shadow workers,” who have been employable but were not looking for work, has kept a lid on wage increases. We’ve been able to keep up strong job growth without strong wage gains because there are still a lot of people who are not working and not formally looking for a job, but who are available to take one when the opportunity arises.
As 2016 unfolds, which of these forces will prove more powerful? If the labor force keeps growing at the gangbusters pace of the last three months, all those new entrants will keep the downward pressure on wages. On the other hand, it might take higher wages to keep pulling people out of their homes and into the workplace.
But here’s the wild card. All this assumes the strong rate of job creation — 242,000 positions added in February, plus positive revisions to previous months — doesn’t get undone by an era of Federal Reserve interest rate increases and volatile global markets.
For the first couple of months of the year, the big story in the job market has been rising participation. The question for the months ahead is how long that can persist absent stronger wage growth — and whether the momentum driving job growth is strong enough to persist despite ever-present risks.
* * *
[T]he rising labor force isn’t just good for the millions of people who have an income that they wouldn’t otherwise, but also because their existence can allow the Fed to be more patient about waiting for wages to pick up.
For now, the thing to do is celebrate the 1.5 million Americans who are in the labor force who weren’t in November — and to look for evidence of how many more people like them are out there, ready to work, as they increasingly have the opportunity.