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Thursday, April 4, 2013

March Jobs Picture as Bleak as It Was 12 Months Ago

Gallup's monitoring of current job market conditions suggest that Americans looking for a job right now face the same bleak situation they did at this time a year ago. This tends to validate the Fed's decision to continue pouring money into the U.S. economy. It also raises serious questions concerning the distortions created by government job reports in early 2013.

Over the past year, full-time job growth as a percentage of the population -- reflected in Gallup's Payroll to Population (P2P) job measure, which is at 43.4% for the month of March -- is essentially no different than it was in March 2012, at 43.7%. At best, full-time job growth has just barely kept up with population growth over the past 12 months.

Gallup's Job Creation Index, at 17 in March, is essentially the same as its 18 reading a year ago. Job creation has not improved over the past 12 months.

Even part-time jobs, which surged in February, fell back to 19.8% of the workforce in March -- matching a year ago. Part-time workers may once again be in the forefront of job losses as companies pull back from hiring.

Wall Street has recently surged to new highs, with autos and housing showing new life and government data showing substantial job growth -- nonfarm payroll employment increased by 236,000 in February. In contrast, Gallup's job data suggest caution concerning the sustainability of recent trends in autos, housing, and the U.S. economy. Based on roughly 30,000 consumer interviews monthly, it appears that the real job situation has not improved over the past 12 months. It is hard to see how consumers can continue spending -- particularly on large purchases such as autos and housing -- with no real improvement in jobs.

Of course, the so-called political class is likely to point to sequestration and the elimination of the payroll tax holiday as reasons for disappointing job growth. However, these are recent phenomena, and do not explain why job growth in the first quarter of 2013 is no better than in the first quarter of 2012.

Whatever the government reports when it releases March jobs numbers on Friday, distorted or not, the real job situation suggests policymakers need to refocus on job creation; issues involving job growth should have top priority over everything else. At this point, it does not appear that -- try as it might -- the Fed can succeed in significantly improving the U.S. job situation on its own.


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