March's Disappointing Jobs Report

For the March jobs report, economists were expecting another month where the economy grew by more than 200,000 jobs. Instead, what we received—according to the Bureau of Labor Statistics—was a disappointing backslide into the anemic months of last fall. The economy created 120,000 jobs in March, a huge drop compared to previous months. At the same time, however, the unemployment rate dropped to 8.2 percent.

This looks good, but it isn’t; the employment to population ratio dropped a tenth to 58.5 percent, and if labor force participation had remained steady from February, then the unemployment rate would have grown to 8.4 percent. On the bright side, the composition of the unemployed has begun to change. Fewer are people who lost their jobs, and more are people who chose to leave them. In other words, a growing number of people feel confident enough about the job market that they will choose a brief period of unemployment to find a better deal. This is in line with the latest measure of economic confidence, which is at a relative high:

Because we’re in a presidential election year, the monthly jobs report has added significance. A strong report gives President Obama momentum for the month, and a weak one allows his competitor—Mitt Romney—to make the case against his economic stewardship. If you haven’t already, expect to see the Romney campaign make a statement about how Obama has failed the recovery and made it worse.

The other side to this—as Greg Sargent points out—is that March marks the 24th month of consecutive private sector job growth—since March 2010, the economy has added more than 4 million jobs. Taken as a whole, the picture is unquestionably better than it was when Obama took office, and there’s no reason to think that won’t continue to be the case. To respond to charges of failure, Obama and his team need to continue to put the economy’s performance in its broader context. Whether this will convince voters is, of course, a different question.