It was easy to see that the economy was not growing rapidly long before Friday's jobs reports. The economy grew at just a 0.4 percent annual rate in the fourth quarter. While this weakness was largely attributable to unusual factors, even averaging in the prior quarter the economy only grew at a 1.7 percent rate in the second half of 2012.
It's not clear what someone would have had to have been smoking to expect a marked upturn from this pace. Did they think the ending of the payroll tax cut would spur growth? Did the fact that new orders for capital goods (excluding aircraft) in February of 2013 were virtually unchanged from February of 2012 lead them to expect an investment boom? Perhaps the fact that job growth over the 5 months from October to February averaged just 40,000 less than in the same months a year ago was the basis for predictions of acceleration?
Yes, housing construction is up. That's good news. Residential construction is 2 percent of GDP. Get out your calculator and figure out how much impact this has.
In short, any serious look at the data would have told people that the economy was weak before the March numbers were released yesterday, nonetheless the Post tells us:
"The economy added a paltry 88,000 jobs last month, less than half the number expected. The healing housing market, resilient consumers and record highs on Wall Street had fueled hope that the recovery was finally taking off. That momentum was seen as essential to helping the economy overcome the drag of automatic government spending cuts known as the sequester over the next few months."
Later it told readers:
"Economists worry that Friday’s job data signals that the economy is in a weaker position than previously thought. Job growth during the first two months of the year was exceptionally strong."
Could we get names here? It would be good to have a list so that everyone could laugh at the people who held such wrongheaded views of the economy and know not to take them seriously in the future. (Btw, even with upward revisions yesterday, job growth for the first two months of 2013 averaged 208,000 a month. At this pace the economy would get back to full employment some time in 2019.)
At least the NYT was good enough to give us a name:
"'People were starting to believe the economy was really picking up steam, and desperately wanted this report to be better,' said Joshua Shapiro, chief economist at MFR Inc. 'But that didn’t happen.'"
There are a few other points in these pieces that deserve comment. The NYT commented on the type of jobs that are being created, noting that a disproportionate number are in restaurants and other low-paying sectors. This is largely a result of the weak job market. The economy always creates lots of bad jobs. The difference now is that in a good economy people don't take the bad jobs. Restaurants and other low-wage employers constantly have help-wanted signs up and some go out of business because they can't find workers at the wages being offered. However in a bad economy workers take these jobs because they have no alternative.
The NYT piece noted that temporary employment is approaching the peaks hit in 2000, quoting Diane Swonk, chief economist at Mesirow Financial,"temporary help is rapidly approaching a new record." While this may be disappointing from the standpoint of people who want to see workers with secure employment, it should not be surprising that employment in temporary help, like employment in other sectors surpasses its level from 13 years ago.
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