PLANK NOVEMBER 2, 2012
This is hardly the first month during this agonizingly slow recovery that we’ve seen an expectations-beating jobs number—171,000, against the 125,000 economists were predicting. But what’s nice about this jobs report is the steady trend that produced it. The report brought big upward revisions to September (from 114K to 148K) and August (from 142K to 192K), making the average during the last four months above 170,000. And the corresponding household survey, which often fluctuates wildly relative to the business survey that produces the previous numbers, followed up an increase of 873,000 jobs with a very strong 410,000-job gain. Short story: This is looking less and less like a blip and more like a bona fide acceleration.
One small but possibly telling data point: Temp hiring has been flat these last three months. Under normal circumstances, a rise in temp employment is generally greeted as good news—it suggests companies are taking their first tentative steps toward bringing on new workers, even if they still have long-term commitment issues. Likewise, a stalling out of temp hires is often a sign of a relapse, suggesting that companies are losing their nerve. But at this point in the recovery, I’d speculate that it’s actually pretty encouraging. When paired with steadily rising overall jobs numbers, it suggests to me that employers are finally deciding to suck it up and bring on fulltime help rather than play the field.
Still, for my money, the most encouraging part of the report comes from the retail sector, which added 36,000 jobs last month (including 4,000 in furniture and home furnishings!), and 82,000 over the last three months (thank you clothing and accessories stores!). It’s not that a few tens of thousands of jobs at IKEA and the Gap are anything to crack open a bottle of Cristal over. (Though I don’t want to discourage you—that kind of outlay would presumably help the economy, too). It’s that you only start adding these kinds of jobs when consumers are feeling good and ramping up spending, and so it’s a very good sign.
One of the big problems for the economy over the past three years is that the happy trends just weren’t converging. Businesses would be ready to spend on new equipment, but not confident enough about demand for their goods to go the additional step of hiring. Consumers would start to feel better about their job security, but still feel anxious enough about their underwater mortgage to hold back on spending. What we’re beginning to see now, I think, is everything click at the same time: Companies are hiring, consumers are spending, the housing market is stabilizing (did I mention that specialty trade contractors were up 17,000 last month)? All of these favorable trends reinforce each other and make the recovery much more durable.
People who analyze the economy from a political lens often talk about the cruel ironies that arise. Some presidents get punished when the economy is bouncing back and voters just can’t discern it (think George H.W. Bush in 1992, or Barack Obama in 2010). Other presidents get credit for recoveries that began on their predecessor’s watch (think Bill Clinton). But in this case, I think Obama is going to get about what he deserves: A narrow but clear victory for a too-weak, too-slow but ultimately real and sustainable recovery. The election gods may be wrathful, but it looks like they’re going to be fair and just in the end.