That sound you heard emanating from Washington this morning might just be the great lurching creak of the U.S. economy finally turning the corner. While we were all transfixed by Facebook's IPO filing, the number crunchers at the Bureau of Labor Statistics (BLS) discovered that in January, the U.S. economy added 243,000 jobs — a very significant improvement over the really quite good December number of 200,000. This was enough to shave another 0.2 pecent off the unemployment rate, bringing it down to 8.3 percent from December's 8.5 percent.
Oh, and about the December numbers: They were even better than initially reported. The BLS revised them, as it does for the previous month with each new month, to 203,000 from 200,000. Is it right to get excited about 3,000 new jobs? Given how intractable the unemployment crisis has been, you'd have to say "Heck yeah!"
The markets have so far responded with a nice upward bump.
There's a somewhat entertaining subplot beneath the good news, which is that the ADP Report — viewed as something of a predictor of the official numbers because it arrives earlier — came in much lower than the BLS data for January. ADP said January saw only 170,000 jobs added. This was below even the so-called "consensus" — an unofficial survey of labor market experts and economists — of 185,000. ADP had been coming in above the ultimate BLS numbers, so a little game of trying to triangulate ADP, BLS, and various outside observers had taken shape. This time around, ADP looked to be playing it safe.
The good BLS number is of course not good enough to signal truly sustained job creation at the level we need to get the national unemployment rate down and down in a hurry. For that, we need 350,000-400,000 new jobs per month. We're a good ways off from that rate.
And in fact, we may not get there for a while. The current quickening pace of job creation — 203,000 in December, 243,000 in January — is consistent with the level of GDP growth we have right now. For much of last year, GDP growth was limping along below 2 percent. It's now moving up into 2-3 percent territory, which is both enough to keep the U.S. well clear of recession and at a decent level of job creation moving forward.
But you'd prefer to see 4-5 percent growth coming out of a severe recession, at least for long enough to restore the unemployment rate to pre-recession levels. We're far from that now. What it looks like is a new period of slow growth. Better than what I was last year calling "stuckflation," to be sure. But there's a big question looming: Where will the unemployment rate be in November? Even if it's close to 7 percent by then, that may not be enough to help President Obama in his re-election bid.