The Takeaway From Today’s Jobs Report
-The article was originally published at The American Spectator.
Today’s jobs report has some good signals for the economy, and some cautionary notes.
The media’s takeaway, of course, is that the unemployment rate dropped to 7 percent and 203,000 jobs were added.
This is the third of four months that have seen at least 200,000 jobs added, though the month prior to that – July 2013 – only saw 89,000 jobs added.
CNBC notes the participation rate, which has been around a 35-year low for some time, ticked up in November – which means more people are looking for work. However, the report cites the positive change in the employment-to-population ratio as an improvement that partly reflected the return to work of furloughed federal government employees.
However, James Pethokoukis of the American Enterprise Institute noted on Twitter that if the participation rate was the same as last November, the unemployment rate would be 7.9 percent. He also noted that the unemployment and labor participation rates are down from a year ago – a combination that indicates the latter is partially responsible for the former, as opposed to jobs added.
The report notes the economy has averaged 195,000 jobs for the past year.
The big question was whether the Federal Reserve would begin tapering off from its Quantitative Easing, which has artificially inflated the stock market with purchases of Treasury bonds. A number of experts cited by different news organizations said tapering is probably in the near-ish future.
Pethokoukis did err in claiming the 195,000 jobs average took place “despite fiscal austerity.” While federal spending has gone down in the last several years, it is still 15 percent higher than it was before the recession, and it is being reduced from historical highs. Since 2009, spending has gone down by a whopping $30 billion. This is hardly the fiscal discipline typically associated with “austerity.”
Overall, the nation has had several good months when it comes to adding jobs, and the overall picture is improving, even if the economy is still staggering to a recovery four-and-a-half years after the last recession ended.
The picture would be a lot better if economic growth wasn’t being slowed by over $200 billion per year because of America’s national debt. Austerity would be a blessing.