Friday’s jobs report was the most important in a while – and it was terrible.
When the jobs market weakened in March and April, economists could tell a sensible story about why the weakening wasn’t as severe as it looked. The unusually warm weather had caused people to spend more money than they had planned, pulling forward economic activity – and hiring – into late 2011 and early 2012. The slowdown in March and April seemed as if it might simply be payback, rather than a truly worrisome new trend.
But you can’t tell that story anymore. Some combination of problems – Europe’s new troubles, the rise in gas prices from several months ago, the continued cuts in government employment, the continued hangover from the financial crisis – has clearly slowed the economy. You can look at either survey that the Labor Department does, of businesses or households, and you can look at any time period. The message is the same.
For the third straight year, the economy has fallen into a spring slump.
Over the last three months, the economy has added an average of only 96,000 jobs a month, down from a three-month average of 252,000 in February. The growth of the last three months is the weakest since August. It’s weaker than the three-month growth in most of 2011 and half of 2010.
Job growth in the private sector has slowed, while the federal government and local governments are cutting workers. (State governments are no longer cutting, but they are not adding many, either.)
What happens now? Don’t expect much action from Congress, despite the talk you will hear on Friday. The jobs numbers will certainly raise the odds of further action by the Federal Reserve, but it’s not clear by how much. Perhaps most important, the decisions of European policy makers loom even larger now.
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