The March 2012 employment situation report from the Bureau of Labor Statistics was a negative surprise and underscored the fact that a robust jobs recovery has not yet solidified. The job growth of 120,000 was much lower than the 275,000 jobs added in January and 240,000 jobs added in February. However, much of the weak job growth in March was likely due to unseasonably warm weather in January and February (think, say, of hiring being pulled forward, i.e., people getting hired in January or February instead of March). Looking over the last three months, average job growth was 212,000, probably a better measure of underlying growth. This, however, is still a far cry from the roughly 350,000 jobs we need per month to get back to full employment in three years.
The unemployment rate ticked down by one-tenth of a percent to 8.2 percent in March, but that was largely due to people dropping out of the labor force, not an increase in the share of the working-age population with jobs. As a reminder of what a healthy unemployment rate looks like, consider that five years ago, in March 2007, the unemployment rate stood at 4.4 percent, and 12 years ago, in March 2000, the unemployment rate was 4.0 percent.
One broad concern is that the drop in the unemployment rate over the last two years has been unexpectedly large given the relatively tepid growth in gross domestic product over this period, and that further significant improvements in the unemployment rate will likely require faster GDP growth than what we’ve been seeing. For more on this, see this recent EPI analysis.
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