Friday’s March Jobs Report from the Labor Department gave hope to the unbelievers of the US economy, and made others wary that while it was a strong outlook, there were storm clouds gathering for a pending recession, in the future. Others, as usual more sanguine, believed that the day of doom, predicted by some from the dismal February report, which gave pause to economists, and lawmakers alike, was only a mirage.
The figure of 196,000 non-farm jobs gave true believers the conviction that it was all possible and that the future was strong, and with the unemployment rate holding steady at 3.8 percent, all was well.
For those that are still worried about what the last several reports have shown about low wages, still holding at 3.2 observers have turned themselves inside out, to see the silver lining.
Many have strained to see light at the end of a cloudy tunnel, and among them we see this: “It’s a volatile number; it tends to bounce up and down,” Martha Gimbel, research director at the job-search site Indeed said. “What’s more important is that we’ve had six straight months above 3 percent.”
In a different vein, some say that “the decline appears to be due to shifting demographics rather than underlying weakness in the job market, according to Andrew Chamberlain, chief economist at the career site Glassdoor” to Business Insider.
When ADP released its earlier report on private employment, of 129,000, some felt that the old trust in them as a bellwether of the Labor Department, might just prove to be true.
Joshua Wright, chief economist for iCIMS, said in an interview with Yahoo Finance that “One of the things that’s been most remarkable over the last 10 years has been just how steady the labor market expansion has been.” after the addition of new jobs for the 101st consecutive month.
“Normally when you have an expansion go on this long, job growth dips into negative territory every now and then,” he said.
With revisions to both January and February, to 33,000 and January from 311, 000 to 312,000, the average gains are now at 180,000, nothing to sneeze at, but with no significant wage increase since the Great recession, there is now an average 4 cents increase resulting in an average hourly rate of $27,70.
Some have ventured various theories form the continued rise of the big box retailers, and the Hercules Amazon, to non-compete clauses, to those staying with the same employer not seeing any increase, and those changing jobs to get one.
None of these theories have been proven to be the central cause, and with the labor participation rate of just below 63 percent, the needle has barely moved, at a resulting 224,000.
Coupled with a much higher cost of living, and a lack of affordable housing, especially in urban areas, the income gap has proved to be a formidable challenge for working American families and individuals.
When adjusted for inflation, the Consumer Price Index is 2.4, lower than it needs to be and with consumer spending as the chief vehicle for economic growth, for the nation, there is still serious concern among economists.
There are some key growth areas, nursing has shown a continued growth, (seen as a service industry) and also a steady growth in software development, an area that has seen rapid growth with the increase in handheld devices and mobile technology, and not seen as one that will abate.
Health care has seen an increase of 49,000, and that old catch-all category “professional and business services” has increased to 34,000, but that also captures temporary agency workers, as well as those loosely assigned to the perimeters of the business community; so caution is urged.
Food and beverage, after the holiday splurge has taken on 27,000 new hires, and may see more in April after early income tax checks have been cashed.
From the ranks of the cheerleaders we have this: “We think the labor market is the strongest thing in the U.S. economy right now,” said Luke Tilley, chief economist at Wilmington Trust, in a comment to The New York Times.
Being all things equal, the economic news has been politicized, and while President Trump has tried to blame Fed Chair, Jerome Powell, for any slowdown, as many are predicting, the Times added, “But in recent months, economists have seen reasons to doubt the strength of the economy. The invigorating effects of the tax cuts enacted at the end of 2017 are expected to fade. Large overseas economies have slowed, in part a reaction to continuing trade tensions. And while the stock market has rallied since a rout at the end of last year, other important financial indicators — such as government bond yields — suggest that investors expect growth to moderate.”
There are also concerns about the GDP, with some forecasting that it will rise to 2.1 percent, with the Federal Reserve, saying it can come from 0.2, but to be noted it was over 2.9 in 2018.
Of equal concern is the current increase in layoffs that might temper and test even the best indicators and future predictions, as CNBC reported that “Layoffs hit their highest level for a first quarter in 10 years as 2019′s job market got off to a shaky start, according to a report Thursday from outplacement firm Challenger, Gary & Christmas.
“Total announced cuts hit 190,410, a 10.3 percent increase from the fourth quarter and 35.6 percent jump from the same period a year ago. The level was worst period overall since the third quarter of 2015 and the highest level for a first quarter since 2009 as the economy was still mired in the financial crisis.”
“Companies appear to be streamlining and updating their processes, and workforce reductions are increasingly becoming a part of these decisions, ” Andrew Challenger, vice president of Challenger, Gray & Christmas, said in a statement. “Consumer behavior and advances in technology are driving many of these cuts.”
Continuing, the report said that “The auto industry led by sector in March with 8,838 layoffs, followed by energy with 8,149 cuts. Financial firms were next with 4,884, while retail followed with 4,860. Retail has announced 46,061 cuts this year, an 18.5 percent decrease from the first quarter of 2018.
“Several indications, such as the number of companies filing for bankruptcy or closing operations, suggest we’re heading for a downturn. The recent proposal to close the southern border adds to the uncertainty and may contribute to more cuts as companies try to adapt,” Challenger said.”
As previously noted, there is the banner headline of jobs gained and also the more accurate household survey, but “A more encompassing unemployment rate that counts discouraged workers as well as those holding jobs part time for economic reasons, often called the “real” unemployment rate, plunged to 7.3 percent in February from 8.1 percent in January. Those employed part time for economic reasons tumbled by 837,000 to 4.3 million while those completing temporary jobs fell by 225,000, which a Labor Department official said was a consequence of the government shutdown that ended in late January.”
This might seem as complicating the picture, but the behind-the-scenes look continues to show a mixed bag of highs and lows, especially in the area of low wages that make it hard, coupled with the layoffs to see March as a stellar rebound, giving us a good, but not great report, and a slow down can lead to a recession.
Add the specter of more layoffs, and the best that can be given is cautious optimism that leans toward the good, but not the spectacular; and the relentless partisanship coming from the White House, gives us pause - but Powell's’ pause in interest rate hikes gives the president what he wants, and if there is a nosedive, then he is blameless.
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