For a while now, chatter has been growing that the economy is headed for a double-dip recession. That’s the type where you think you have recovered, but in fact you are only on the first bump of the roller coaster. But this morning’s jobs numbers seem to suggest the possibility of a double dip is receeding. The Labor Department said the economy lost 36,000 jobs. Yes, still a loss. But it is far better than expected. Economists were predicting anywhere from a loss of 53,000 to 100,000 jobs for the month. And remember a year ago, the US job market shrunk a horrific 726,000 in February 2009 alone. Add in the snow effect and the economy looks like it has fully thawed. Here’s why:
Economists had predicted that the massive snow storms that hit the East Coast in February would temporarily slow hiring. I’ve argued in the past that there is no long-term economic effect of snow. But on a short-term basis I can see how snow delays things. People can’t get to job interviews. Temporary employees have a hard time making it to work, and are therefore not technically employed.
Top economic forecasting firm MacroEconomic Advisors predicted that the snow would reduce hiring in the month by anywhere from 150,000 to 220,000 jobs. So even if we take the low end of that estimate, the jobs number for the month had we not had to spend two weeks digging out our cars would have been a gain of 114,000 jobs.
So if we had sun instead of snow, February would have been the best jobs month since May 2007, and the second time since the beginning of the recovery that we have had a positive jobs number. And if you believe my argument that snow only delays things, we have a 200,000 jobs head start. That almost guarantees us to have a positive jobs month in March, and our first back-to-back gain in monthly jobs.
Of course, the double dippers have another take on the job numbers. That is that the snow had no affect on the jobs numbers. And that a loss of 36,000, while far better than last year is sign that the economy is losing steam. We lost 100,000 jobs in December, and 26,000 jobs in January. So we should be positively in the plus category by now. Not exactly. Economies and recoveries never move in straight lines. And most of the other economic data out there is pointing to a recovery. Retail sales are rising and manufacturing is growing again. Also, wages are up. So consumers are spending. Companies are starting to put all of that cash sitting on their sidelines to use, buying other companies and putting in factory orders. Then there is the market which, up 90 points on the jobs numbers in the morning, continues to hang above 10,000. The economy is slow to turn around, but when it does it tends to snap back strongly. Double bounce, anyone?