INDICATOR: March Employment Report
KEY DATA: Payrolls: +88,000; Private Sector: +95,000; Unemployment Rate: 7.6% (down 0.1 percentage point)
IN A NUTSHELL: "You cannot cut spending and raise taxes and think there will be no impact on the economy."
WHAT IT MEANS: My recent favorite phrase is that the only thing the economy has to fear is Washington itself and it appears that my cheeky comment has some truth to it. Job growth plummeted in March but it did come after a surprisingly large, upward revised gain in February. The new number for February is now 268,000, up 32,000 from the first go 'round. Even with those additional jobs and a similar upward revision to January's numbers, the economy has added just about 170,000 new positions a month for the first three months of this year. That is enough to keep things going but not a whole lot more than that. The details were not great either. Restaurants, construction, health care, accounting and temporary work firms did fine. But retailers cut back sharply, manufacturing, finance and transportation sliced their payrolls. The reeling postal service is thinning its ranks dramatically, but it looks like state governments are finally starting hire again. As for the decline in the unemployment rate, it was due to a sharp drop in the labor force and the participation rate. In a vibrant economy, people come out of the woodwork looking for jobs. That is not happening right now. Wages were largely flat but hours worked and overtime hours rose, indicating that companies are meeting growing demand through productivity not hiring.