It might be tempting to read today’s expectations-beating jobs number—163,000, against private forecasts in the neighborhood of 100,000—as a sign the economy is surging just in time to help Barack Obama. My take is a bit more pessimistic, though not quite demoralizing.
The big reason today’s number seems encouraging is that it comes after several months of truly awful sub-100,000 figures, which were all the more discouraging because they came after some very solid numbers early this year (about 225,000 on average). But, if you step back, you see that all of this was a diversion. Today’s jobs number brings the monthly average for 2012 to 151,000. It seems increasingly plausible, as many economists suggested at the time, that the big jobs numbers of the first three months were inflated by unusually warm weather, which moved up a lot of hiring and short-changed the second quarter numbers. Now that we have that one-off quirk behind us, it’s easier to see the underlying reality, which is not great job growth but not recession-territory either.
In fact, this underlying reality is the one we've been living for a while now. As the BLS notes, this year’s 151,000 monthly average is almost identical to last year’s 153,000 average. There’s no hint of acceleration in the rate at which we’re creating jobs, in other words, but no indication the bottom is about to fall out either. One-hundred and fifty thousand is kind of what we do these days.
That’s probably mildly encouraging if you’re rooting for Barack Obama, since moderate job-growth gives him a decent chance at re-election. But it’s pretty discouraging if you’re rooting for something resembling normalcy, since at this rate it’s going to take well into the next decade to get unemployment back to a healthy 5-6 percent rate.* (Recall that we need to add 100,000 or so jobs each month just to prevent the unemployment rate from rising as the population grows.)
Or, put somewhat differently: The country may well settle for two years of 150,000 new jobs per month in the aftermath of the worst recession and financial crisis in 80 years. But it won’t (and shouldn’t) settle for five years of barely adding new jobs each month. And yet, given the trend-line that’s coming into focus, that’s where we seem to be headed.
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*By my crude calculations, it would take about seven years to get down to 5.5% unemployment at this rate assuming no one who’s out of the labor force gets back in. For every one million people who are out of the labor force and return, it would take an additional year-and-a-half.