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Economy Going in the Wrong Direction?

The Wall Street Journal's Jonathan Cheng reports the March jobs report was "disappointing," and "is the latest crack in a shaky global recovery—and a test of will for investors looking to climb aboard a rally that has pushed stock benchmarks to new highs." The Journal continued:

"For weeks, investors have been growing confident about global economic prospects and looking for a pullback as a chance to pile into the stock rally. But with just 88,000 new jobs added to the U.S. economy in March, investors on Friday instead faced a new debate over whether the global recovery can power through a season that has proved volatile in the past four years."

And at the American Enterprise Institute's blog, AEIdeas, James Pethokoukis writes:

"It would take superspin powers to portray the March jobs report as anything other than a huge step in the wrong direction. The US economy added just 88,000 jobs last month, 95,000 in the private sector as public payrolls fell by 7,000. The official unemployment rate ticked down a tenth of a point to 7.6%.

1. That is a paltry number of jobs, more or less matching assumed labor force growth per month. So the economy must add at least that many jobs just to keep the labor market at current depressed levels. In other words, at 88,000 jobs a month the economy would never ever close the jobs gap.

2. The unemployment rate dropped because of a further decline in the labor force participation rate, now at its lowest level since 1979. If that rate were merely at March 2012 levels, the unemployment rate would have been 8.3%. At January 2009 levels, 11% (or 10.98%). While going back four years ignores demographic factors like baby boomer retirements, the aging of America doesn’t explain the entire drop. (Indeed, before the Great Recession, the Congressional Budget Office predicted 2013 labor force participation would be 65.2% (vs. 63.3% in March), assuming demographic changes.)

"Factoring out the retirement issue might put the adjusted unemployment rate at 9.9%, says the economics team at Hamilton Place Strategies. Also, the employment-population ratio continues to bottom feed. (See above chart)."

Here is how Pethokoukis concludes his comments about the March jobs report this way:

"I think the simplest explanation is that the economy continues to grow at a weak pace — though the first quarter might actually have been pretty strong — and the result is erratic job growth. The March number could get revised higher and in the end might not look so bad. There is certainly no reason for the Federal Reserve to back off its bond buying, and every reason for Congress to stop raising taxes and begin to implement a pro-growth agenda from high-skill immigration to cutting business taxes."

He also notes the job market "is still falling short of predictions made by the Obama economic team back in 2009," and includes the following chart:

 

Here is the link to the Department of Labor's March jobs report, technically the "employment situation summary," which undoubtedly contains more information than some of us could absorb in a lifetime, e.g., it includes tables A-1 through A-16 and B-1 through B-9.

In other news reporting, the Los Angeles Times says, "Jobs report paints a dreary picture." Finally, at Townhall.com, managing editor Kevin Glass writes:

"There are quite a few explanations for why the economy sputtered in March. The payroll tax hike from January's fiscal cliff deal might have started taking effect. It may be possible that anticipating effects from sequestration would have frozen some employers' payrolls. But what the media likely won't focus on is that Obamacare implementation has weighed heavy on the minds of employers."

Glass also includes a quotation from Paul Howard a senior fellow at the free-market Manhattan Institute. The bottom line for Glass: "this was a mediocre jobs report. What seemed like an economy poised to finally rebound in February stalled in March. Federal policy likely played a role in this - be it the tax hikes from January's fiscal cliff deal, the implementation of Obamacare provisions, or the anticipation of sequestration. People have given up looking for work en masse, and there aren't really any signs of a sharp turnaround coming."

UPDATE (4/6/13) At CNBC yesterday, Allison Linn writes:

"If you're thinking a drop in the jobless rate is reason to celebrate, bad news: You might want to keep that bottle of bubbly corked.

"The unemployment rate dipped to 7.6 percent in March, from 7.7 percent a month earlier, the Bureau of Labor Statistics reported Friday. But the drop came as nearly 500,000 Americans left the labor force, meaning they stopped working or looking for work and were no longer counted in the official employment numbers.

"Normally we'd love to see a decline in the unemployment rate. Unfortunately, this was largely due to a lot of people dropping out of the labor force," said Joel Naroff, chief economist with Naroff Economic Advisors."

The two charts below, from Zero Hedge, are posted at Walter Russell Mean's blog, Via Meadia. They quantify the "war on the young." First:

 

And the second:

 

As Means concluded, " The charts speak for themselves. Grim times for anyone who’s not already well established in their field."

UPDATE (4/7/13) At CNS News, Elizabeth Harrington writes, "There is a bright spot in the March jobless numbers, if government is your line of work," noting the unemployment rate for government workers is 3.6 percent.

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