Payrolls were up only 88,000 last month, well below expectations, and while the unemployment rate ticked down to 7.6%, the decline in the jobless rate was due not to job gains, but to people leaving the labor market. In fact, the share of the population in the workforce—working or looking for work—fell to 63.3%, the lowest level in decades.
In other words, a notably weak jobs report. As usual, we want to be careful not to over-interpret one month’s worth of pretty volatile data. Still, over the first quarter of the year—thus averaging out some of the statistical noise in the report—payrolls are up 168,000 per month, compared to 209,000 per month in the fourth quarter of 2012.
I’ll have more details later, but for now, I’ve gotta say that this deceleration in job growth and deterioration in labor force participation looks a lot like what you’d expect if you hit a still weak recovery with the repeal of the 2% payroll tax break and the sequester (which, as I said yesterday, is probably only a minor factor in these numbers, but will grow as the year progresses).
There’s a lot of moving parts in our economy, and the signal-to-noise ratio is never as high as you’d like in these monthly reports. But this looks to me like a confirmation of the basic truth that policy matters, especially at a time like this. And from the perspective of a labor market that has yet to reliably show consistent signs of solid gains, we’re simply not making the right policy choices.