Signs of economic weakness continue in latest jobs, income reports
San José, CA – The February 2024 employment report released by the Department of Labor on Friday, March 8 continued to show signs of weakness. While total job creation seemed healthy, with 275,000 net new jobs reported by the survey of employers, there were significant downsides to the overall report.
First of all, revisions to the December and January job numbers meant that there were 167,000 fewer jobs added those two months than first reported. The January employment report in particular was reduced from 353,000 net new jobs to only 229,000.
Second, the unemployment rate rose from 3.7% in January to 3.9% in February. This number comes from a survey of households, which showed a 184,000 fewer people working in February as compared to January. This was the third month in a row that the number of people working has declined, opposite to what the survey of employers is saying.
The broadest measure of unemployment, which includes those workers who are working part-time because full-time jobs aren’t available, workers that have given up looking, and thus aren’t counted as unemployed, continued to rise to 7.3%. This measure was only 6.7% last July. Most of the increase has come from more workers who are taking part-time jobs because full-time ones are not being offered. This explains part of the difference between the growing job numbers and the declining number of people with jobs.
President Biden, in his state of the union address on Thursday, repeated the claims of many mainstream economists that the economy is managing a “soft landing” where job growth continues while inflation continues to cool. But talk of a “soft landing” typically peaks before a recession, so is actually a negative indicator for the future economy.
While the national news reported on the decline in the Federal Reserve’s (the U.S. central bank) favored inflation measure for January, little was said about the rest of the report. The Personal Consumption Expenditure, or PCE, index did decline in January to 2.4% higher than a year earlier, from 2.6% in December. But the income and spending figures were very weak. There was no increase in after-tax incomes after correcting for inflation. And consumer spending, adjusted for inflation, actually declined by one-tenth of one percent in January (this measure, like other government statistics, is adjusted for seasonal changes, in this case holiday spending).