Summary
The article appearing in the Wall Street Journal on April 3rd raises some interesting thoughts. It comes, of course, on the heels of the news that while economists predicted that new private sector jobs would reach 200,000 in the month of March, the actual numbers came in disappointingly low at 158,000. When compared to February’s tally of 246,000 new private sector jobs, it’s even more disappointing that this level of growth could not be sustained. When compared to the average of 232,000 new jobs created monthly in the private sector October – December 2012, it raises even more disappointment and doubt, and signals a slow-down of hiring.
Apparently, some of the factors used in the forecasting of economic expansion and thus job creation were “a string of strong data points”, consisting of indirect signals from the housing and consumer markets. As specified by WSJ in terms of signals for the housing market: “the housing market is at last showing signs of a sustained recovery”. In terms of consumer spending, WSJ states that “consumer spending has held firm despite a payroll-tax increase… and higher gasoline prices early in the year”. These signals were what led economists to the assumption that the U.S. economy was expanding at a rate of approximately 3.5% per year – the fastest pace of growth that would be enjoyed by the country since the end of 2011. This prediction alone, if it were to become an actuality¸ would obviously make a lot of people feel a lot better about the world, at least in terms of the U.S. economic crisis.
But the slow-down in jobs creation has had a very stinging and alarming effect, particularly when the unemployment rate remains high at 7.7% and employment is still 3 million below the prerecession level. This has caused many economists (and average people like me) to wonder where they went wrong and what could be the reason(s) for the deflated hiring pattern.
In another article published by the Financial Times (also on April 3rd), Mark Zandi, the chief economist at Moody’s attempts to explain the private sector hiring slow-down by citing that construction employment is no longer in an upswing due to the stabilization of the superstorm Sandy fallout. He also believes that impending healthcare reform has deterred private companies with close to 50 employees from making any hiring decisions until policy regarding these companies is made clear and legally enforceable.
To boot, new claims for jobless benefits have inched up over the past two weeks despite their pattern for trending down earlier this year. As Dean Baker, co-director for the Center for Economic and Policy Research states for WSJ, "I don't see how people could think we're accelerating."
Even more disturbing is that the WSJ article states that economists predict yet another slow-down in economic growth toward the end of 2013, which doesn’t bode well for optimists hoping for a surge in hiring – unfortunately, the publication does not give the readers any insight as to what is