Job market may not be as strong as expected
Economists mostly shrugged off news that hiring slowed in March as a one-month aberration. But what if they’re wrongâ¢ What if the sharp drop in job creation signaled something more ominous?
Investors appeared worried on Monday. The Dow Jones industrial average lost 131 points on the first day of trading since the government said on Friday that employers added just 120,000 jobs in March. That was only half the pace of hiring recorded in December through February and well below the 210,000 economists had expected.
Economists were quick to explain away the March numbers.
Unseasonably warm weather in January and February, they said, had led construction companies and other employers to hire workers earlier in the year than usual — in effect, swiping jobs that would have occurred in March.
And they noted that jobs numbers typically bounce around from month to month. Some economists are waiting to find out whether employment growth picks up again when the hiring numbers for April are announced the first week of May.
But many can list reasons to worry about the job market. Here are five:
— Sluggish economic growth. The economy hasn’t been growing fast enough to sustain the level of job growth the United States enjoyed from December through February — an average of 246,000 jobs a month. The economy is expected to grow about 2.5 percent this year. Economists say that’s consistent with monthly job growth of about 140,000.
— Higher gasoline prices. They have risen 65 cents this year to a national average of $3.93 per gallon, according to the AAA Daily Fuel Gauge. Economists had expected consumers to keep spending at a healthy pace in the face of higher prices at the pump. But retailers cut more than 62,000 jobs in February and March, which suggests that gasoline price increases might have started to pinch consumers’ budgets.
— Shrinking incomes. Companies cut workers’ hours in March, reducing their average weekly earnings. Pay isn’t keeping up with inflation either. In February, inflation-adjusted earnings were 1 percent lower than a year earlier. That means less money to spend without borrowing or dipping into savings.
— Job-market dropouts. The economy has added nearly 1.9 million jobs during the past year, and the unemployment rate has fallen from 9.1 percent to 8.2 percent since August. But the job market might not be as strong as those numbers suggest. One broad measure of the labor market’s health refuses to strengthen: The percentage of the working-age population that’s working has been stuck below 59 percent for 2 1/2 years. Many economists say millions of Americans have given up looking for work.
— A lot of catching up to do. The solid job gains of December to February disguised a painful fact: The economy still has a long way to go to recover all of the jobs that were lost. From January 2008 to February 2010, the economy lost 8.8 million jobs. Only about 3.6 million of those have been regained.