Seeing economists laugh is as rare as Joe Biden getting through a press briefing free of gaffes. But the latest jobs report was a knee-slapping compilation of US labor data that would put Charlie Chaplin or the Marx Bros to shame. The headline numbers enabled the president to tout Bidenomics and allowed the administration to champion the soft-landing narrative as the mainstream media will refrain from looking beyond the leading figures.
The February Jobs Report
According to the Bureau of Labor Statistics (BLS), the US economy created 275,000 new jobs in February, topping the consensus estimate of 200,000. This was up from the downwardly revised 229,000 in January. The unemployment rate rose to 3.9%, the labor force participation rate was unchanged at 62.5%, and average weekly hours edged up to 34.3. The U-6 unemployment rate – which factors in the unemployed, underemployed, discouraged, and marginally attached – rose to 7.3%.
Additionally, a large portion of the employment gains was concentrated in government or government-funded sectors: health care (67,000), government (52,000), and social assistance (24,000). There were also increases in food services and drinking places (42,000), construction (23,000), and transportation and warehousing (20,000). Manufacturing shed 4,000 positions, while other industries saw little change in their payrolls.
As expected, President Biden issued a statement:
"Three years ago, I inherited an economy on the brink. Now, our economy is the envy of the world. We added 275,000 jobs last month—nearly 15 million since I took office. Unemployment has been under 4% for the longest stretch in more than 50 years. Wages keep going up. Inflation keeps coming down. And I’m taking action to continue lowering costs by taking on Big Pharma, getting rid of hidden junk fees, and making housing more affordable."
The Fun Stuff
One part of the recent jobs report excited economists: revisions. As Liberty Nation has reported over the past year, downward adjustments to the non-farm payrolls report have been fast and furious. In fact, in ten of the last 12 months, the BLS has lowered the official numbers. Of course, nobody cares anymore because outdated information will have little bearing on policymaking.
The federal agency trimmed the December and January employment gains by a combined 167,000, with 75% of it focused on last month’s data. Average hourly earnings were also adjusted downward, with month-over-month and year-over-year readings dipping to 0.5% and 4.4%, respectively.
Another notable finding was that full-time employment declined by 187,000, while part-time workers rose by 51,000. Over the last year, the US has seen 900,000 new part-time jobs. By comparison, full-time positions have plummeted by 285,000. Some economists argue that a rise in part-time employment and a drop in full-time can sometimes be seen as a recession indicator.
The household portion of the February jobs report, which politicians on both sides of the aisle wish to avoid, showed the number of employed people falling by 184,000. This side of the monthly report is relevant because it does not duplicate the data as the establishment part does. Plus, the statisticians reported that the number of people working two or more jobs remained above eight million.
Finally, there has been a years-long divergence between native- and foreign-born workers. The recent report confirmed that native-born employment was still one million below pre-pandemic levels, while foreign-born employment was 3.3 million above pre-crisis levels. This statistic matters not because legal immigrants are obtaining jobs but because the metric includes illegal aliens, or, as the BLS says, “undocumented immigrants.”
What’s Next?
Looking ahead, market analysts and economists will wait with bated breath for the next set of revisions. As of late, it is not so much the number of new jobs the economy has produced but rather what the size of downward adjustments will be in the coming NFP reports. For all the talk of how strong the US labor market is, the devil is in the details, whether an explosion of part-time jobs or government-concentrated employment creation. The year’s first two job reports confirmed, according to a chorus of economists, that the labor market is finally cooling down despite the better-than-expected headline numbers.
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