For Pessimist or Optimist, Jobs Report Is More of the Same

In these last three years, there have been countless times when a couple of months in a row of surprisingly good or surprisingly bad jobs readings have given a false signal, prompting either a sense of glum disappointment or (with hindsight) misplaced optimism about whether a meaningful economic recovery is underway. It has made fools of many good economic analysts who have been too quick to detect turning points.

The February jobs numbers are the latest example.  The December and January reports had shown an average of 94,000 jobs a month were added, which would extrapolate to 1.13 million jobs a year. If taken at face value, they would seem to suggest one of those troubling decelerations had taken hold yet again.

The details of the February report were nothing to get excited about, with 175,000 net payroll jobs added and an uptick in the unemployment rate to 6.7 percent (driven by an additional 223,000 people reported as being unemployed) from 6.6 percent.

But it is both a relief and a disappointment that the new numbers offer some assurance that long-reliable pattern of adding a bit more than 2 million jobs a year continues apace. The 175,000 net jobs added in February extrapolates to a pace of 2.1 million jobs a year, squarely within the long-term range. The jobs recovery in the United States is astonishingly consistent, astonishingly resilient, and astonishingly underwhelming.

Source: Bureau of Labor Statistics.

Way back in late 2011, the pace of annual job creation in the nation reached around 2 million; the precise number for 2011 was 2.083 million jobs added to United States payrolls. For the 12 months ended February 2014, the equivalent number was 2.158 million. In the intervening two-plus years, the annual rate of job creation has never fallen below 2.025 million and never reached above 2.462 million.

The more things change in the job growth picture the more they stay the same.

It’s nice to have some reassurance, but ultimately disappointing as well. The pattern is strong enough and well-entrenched enough that policy makers, including those at the Federal Reserve and the White House, seem to accept the pattern as good enough. The Fed in particular is almost certain to continue tapering its program of bond buying at its March meeting after a jobs number that reaffirms their projections of continued economic improvement.

Forecasters keep expecting that sunnier days are just around the corner, that the economy is poised to launch into a more robust pattern of growth any day now. The last bout of optimism was late last year, when a couple of strong quarters of growth were strung together (at least according to the data available at the time) and a few months’ improved jobs numbers.

Nothing about the economic data we’ve seen so far in 2014 give much assurance that those forecasts are right.  The latest numbers on Friday are, more than anything, a reminder of just how entrenched this pattern of 2 million or so jobs a year truly is. Whether that’s good news or bad news depends on your own predilection for optimism or pessimism.