What to think of the new employment burst

by Patrick Emerson
Oregon Economics Blog

The report out from the Bureau of Labor Statistics is excellent. 200,000 net new jobs is not just a good number but a great number. As a rule of thumb, you need at least 100,000 new jobs a month to keep up with population growth, so double that is great given the economy we are in. Why do I say great? Remember that state and local governments are still in crisis mode: severely cutting services, to the tune of 280,000 job losses in 2011. Thus 200,000 with government on the sidelines is very healthy private sector job growth.

The unemployment rate is less important fundamentally, but important psychologically, and it fell to 8.5%. In this day and age that qualifies as good news (anyone even remember the days of 4% unemployment?). [That was 2000, by the way, when we last had a annual average unemployment rate of 4% but 2006 and 2007 had 4.6% annual rates]

It is good to keep in mind that this is an ocean liner we need to turn around and start building up speed. First come private sector employment and consumption, fueled in part by folks starting to make the purchases they have been putting off on things like cars that wear out and where we have seen a strong sales bump recently. Then with tax revenues increasing governments can stop the bloodletting and even start to restore services. Investment starts to pick up as the economy gains steam and so forth. In other words we are still in the early days of a process that will take a few years, but this is how it begins.

The big storm cloud continues to be Europe and the Euro zone. Let’s hope they can prevent crisis there.

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