As mentioned in my earlier post, we may be at the beginning of another downshift in job growth or March’s disappointing report could be an anomalous blip down in a better underlying trend. There’s some reason to hope for the latter—I noted the seasonality issues caused by the mild winter—but we could also be seeing the impact of higher gas prices on growth, real incomes, and consumption.
Still, you really don’t want to build too big a story out of one month, especially when it’s off trend. Look at it this way. If you plot the monthly gains in the private sector, as I do in Figure 1 below, you clearly see the March deceleration.
But if you smooth out some of the possible monthly anomalies by taking quarterly averages, and then plot average monthly gains over the past three quarters, you get the clear step function below.
We don’t know which is correct. I’d remain about as nervous as I was before. We’re adding jobs, but at too slow a clip. We have tools to do something about it, but I’m afraid they come under the rubric of fiscal stimulus, and those of us who would take advantage of low borrowing rates to apply such stimulus right now are in a distinct minority around here.
All’s I’m saying is that if it were me, I’d be out there saying:
You know what, America? This monthly jobs report may be a one-off disappointment or it could signal that the job market is doing worse than we thought. Either way, there’s too many un- and underemployed people out there.
And guess what else there is out there? There’s too many crumbling public schools, too many bad roads, too many water systems, airports, rail lines, and you name it in need of repair. There are too many states and towns cutting back on vital services, laying off teachers, cops, firefighters. Too many homeowners underwater on their mortgages.
So let’s marry a problem with a solution here, take advantage of historically low interest rates—a market signal that this is precisely the time to make these investments—and take out some serious insurance against the possibility that the March report is flashing red.
Or something to that effect.