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Economy Added 192,000 Jobs in February

The Bureau of Labor Statistics reports that the economy added 192,000 jobs in February, a decent number, and the topline unemployment rate fell slightly to 8.9%. December and January were revised upwards, each by about 30,000 jobs. Manufacturing, construction and transportation added jobs in February, which is a sign of a robust economy. So in some sense, we see an unemployment picture definitively trending upwards for the first time in quite a while.

Of course, this comes right before a federal budget for the rest of the year that could suck as much as $61 billion out of the economy. And it comes right as oil and commodity prices are spiking due to instability in the Middle East and increased global demand. And it comes on the cusp of state and local budget cuts that could reduce another $150 billion in demand. So while the February number is good, unless all these potential economic shocks are dealt with, it may be the best we’ll get for a while.

In addition, the numbers on long-term unemployed are still very troubling. Those jobless 27 weeks or more make up 43.9% of the total unemployed – 6 million people. Another 8.3 million are employed part-time involuntarily, because they can’t get additional hours from employers. And there are millions more on the sidelines that aren’t entering back into the employment picture; the civilian labor force participation rate and the employment-population ratio remained unchanged in February, despite the job increases.

Once again, all the job growth is coming from the private sector. State, local and federal government employment continues to edge down, providing a drag on recovery. That’s bound to get worse with all the budget cuts, and eventually, this will carry over into consumer spending and the private sector. As Paul Krugman puts it today, what is being devised is a textbook example of how to kill a recovery:

Of course, Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right.

But there’s no reason for the rest of us to share that belief. For one thing, it’s hard to see how such an obviously irresponsible plan — since when does starving the I.R.S. for funds help reduce the deficit? — can improve confidence.

Beyond that, we have a lot of evidence from other countries about the prospects for “expansionary austerity” — and that evidence is all negative. Last October, a comprehensive study by the International Monetary Fund concluded that “the idea that fiscal austerity stimulates economic activity in the short term finds little support in the data.”

And yet, that’s exactly the road down which we’re going.

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David Dayen

David Dayen