Time to take a crack at handicapping tomorrow's official March jobs report from the Bureau of Labor Statistics (BLS). If you'll recall, February came in at 227,000 and the national unemployment rate remained at 8.3 percent. That was good but not great; the economy really needs to add close to 400,000 jobs each month to reduce the rate to a pre-crisis level. But for the moment, adding 200,000-plus jobs each month shows that the economy is slowly recovering and expanding, even if GDP growth is only running at 2-2.5 percent.
There's a wrinkle to the March numbers — the data is usually released in the first Friday of the month, and this time around Friday is a holiday for the stock market (Good Friday). This basically gives traders a long weekend to digest the news.
Anyway, to the handicapping! The ADP report came out yesterday and said the economy added 209,000 in March. The Bloomberg consensus — a survey of 77 economists — says the number will be 205,000. Business Insider has been crunching various datasets of late and comes up with 193,000, a somewhat alarming figure given that we want to see 200,000 at least to support the idea that GDP is puttering along at around 2-2.5 percent, down from the 3 percent we saw in the fourth quarter of last year, but not the discouraging sub-2-percent pace we witnessed in much of 2011.
It's worth noting that last month, both ADP and Bloomberg were off, to the negative side, by about 10,000 jobs. Business Insider erred well to the positive side, at 285,000 (Overcompensating with the March prediction, perhaps?)
I thought we'd come in above January's 243,000 — which actually wound up being 284,000, after the BLS revised the data — so I was off by 17,000 or so. That's an encouraging trend, by the way — not my being wrong, but the BLS revising higher, with regularity, the previous month's numbers.
Everyone figures that the March number will be lower than the initial, unrevised February number, so I'm going to assume the contrarian stance and restate my belief that first quarter GDP is better that 2-2.5 percent. I'm basing this on one factor: that consumers are buying more new cars and other durable goods than in 2011. We're on track to sell at least a million more new cars in the U.S. in 2012 than we did in 2011. Consumers need to take out loans to buy these cars, which means growth both in manufacturing and financial services, to meet the demand for new autos, which is also a demand for new auto loans. An added benefit is that buying new cars means trading in old cars, which improves the used car business (and generates used-car loans).
The same reasoning applies to washing machines, refrigerators, and other stuff meant to last three years or more. Minus the trade-in factor, of course.
Also, as a sidebar, I think many economists and the Federal Reserve are moving into a conservative mode. The Fed especially doesn't want to see too much GDP growth because it will create pressure to raise interest rates to head off inflation, and that will be a problem for equities markets. Please note that he stock market is already disappointed that Ben Bernanke & Co. won't be doing another round of quantitative easing, or QE3, to urge on the reflation in equities.
My margin of optimistic error seems to be around 15,000 jobs, so I'm going to say we'll come in at about 225,000 for March and see the unemployment rate nationally fall to 8.2 percent.