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1 million new jobs and counting





The jobs picture is getting a lot brighter with the release of the April employment data. According to the household survey, which for some reason doesn't get much press, the private sector has created 1.15 million new jobs so far this year. The well-known establishment survey (which typically lags the household survey at economic turning points such as we have today) finds that the economy's private sector has added about half a million jobs so far this year. Perhaps the reality is somewhere in the middle, but regardless, it is now very clear that the economy is growing and will likely continue to strengthen in the months ahead. Yesterday's Monster Employment Index confirms that businesses are going to be hiring more and more.

Despite these welcome gains in new jobs, the unemployment rate jumped back up to 9.9%. How is that? Simple: the number of people who are working or would like to work (the labor force) has surged by 1.7 million this year. A lot of people who had previously said they weren't looking for work now are; formerly discouraged workers are now back in the hunt for a job. We could see even more of this going forward, by the way, since it is still the case that the labor force, which tends to grow about 1% a year, hasn't grown at all since late 2008. So even some healthy job gains in coming months could fail to bring the unemployment rate down. That makes for bad headlines, but it doesn't make the economy any weaker.


The first chart, by the way, focuses only on the private sector. As the second chart shows, the public sector has also added some jobs of late, but that is almost entirely due to census hiring. Apart from that, the public sector is being squeezed by the marked deterioration in its finances. This is not unusual at this stage of the business cycle, and it will probably continue for some time to come as the electorate revolts against bloated government at all levels.

All in all, I think this is very encouraging news. There is every reason to believe the economy will continue to grow for the foreseeable future. The private sector's inherent dynamism has managed to cope with all the difficulties thrown in its path over the past few years. Tremendous adjustments have been made, productivity has surged, businesses are profitable, and so now another expansion is underway. This can feed on itself for a very long time, and it is a lot more powerful than the problems surrounding Greece's public finances.

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