As we told you last week, the recovery is already over.
Consumers are hunkering down, burdened by real debt, increasingly joblessness and overwhelmingly negative expectations about the future.
We fully expect Friday’s jobs report to show that consumers didn’t get things wrong. Things are getting worse again.
(If that gets you down, check out our earlier post arguing that a temporary down draft in unemployment could still show that we’re preparing for a healthier recovery.)
Here’s the bleak assessment from AP Economic Writer Christopher Rugaber.
By CHRISTOPHER S. RUGABER, AP Economics Writer
WASHINGTON (AP) — The February jobs report to be released Friday is likely to be bleak.
Blame the weather, the White House says.
That’s because last month’s snowstorms are expected to have artificially inflated job losses by at least 100,000.
Not so fast, private economists counter. The report can’t just be dismissed. Once the snow effect is filtered out, they say the data will still signal weak hiring: Little if any job growth, and an unemployment rate predicted to rise to 9.8 per cent or more from 9.7 per cent.
Doubts about the February data have arisen because some people who didn’t make it to work because of snowstorms in the Eastern United States weren’t paid. So they won’t be included in the government’s payroll calculations. The Obama administration has pre-emptively pointed to the weather to explain a poor jobs report.
“The blizzards that affected much of the country during the last month are likely to distort the statistics,” Larry Summers, a top economic adviser to President Barack Obama, said in an interview on CNBC.
Still, private economists say they should be able to separate out the impact of weather. They think that will help isolate the underlying job trends.
“There will be a lot of valuable information about the job market in the report … not just weather-related noise,” said Zach Pandl, an economist at Nomura Securities.
That said, Pandl and other economists think the February data will be viewed with some scepticism because some of the figures won’t be as precise as usual.
“It will be very hard to see the signal from the noise in the February employment report,” said Joel Prakken, chairman of Macroeconomic Advisers. Still, his firm predicts the snowstorms will inflate the reported job losses by an extra 150,000 to 220,000.
Last month’s severe weather happened to occur just before the week when the government surveyed companies on their payroll levels for February. Such figures are being scrutinized for any signs companies are starting to boost hiring.
The economy is recovering slowly from a recession that eliminated 8.4 million jobs. Job growth remains scant. The economy would need to add 100,000 jobs a month just to keep the jobless rate from rising — and about 300,000 a month for several years to lower the rate to a more normal 5 per cent to 6 per cent.
There’s a long way to go. Employers shed a net 20,000 jobs in January, the government said last month. For February, Wall Street economists predict the government will say job losses grew to 50,000, according to a survey by Thomson Reuters, and that the jobless rate rose to 9.8 per cent.
But excluding the impact of the storms, the economy may have produced a net jobs gain in February, economists say — though not enough to keep the jobless rate from rising.
Here’s what economists will be looking at in the report to filter out the distortions:
— The two separate surveys the government conducts to gauge employment: one of households, the other of businesses. The household survey is used to calculate the jobless rate. The employer survey counts the net change in jobs. The weather is likely to affect mainly the employer survey. Employees who didn’t work and weren’t paid won’t be included in the payroll count. Some hiring may also be delayed.
— The household survey is less likely to be distorted by the snowstorms. Workers who stay home due to snow but have jobs will be counted as employed. Still, the unemployment rate is expected to rise because hiring remains slight.
— Job changes by industry. Some sectors, such as construction, restaurants, transportation and retail, are most likely to be affected by bad weather. If job losses in those industries are higher than in recent months, the losses will likely be attributed to bad weather. Changes in other industries are more likely to be taken at face value.
There are other potential distortions to the employment data: More people might have had jobs clearing snow, some economists say. And the government is expected to have boosted temporary hiring for the 2010 Census, though it’s not clear by how much.
Recent data have sketched a discouraging employment picture. First-time jobless claims, after falling for most of last year, have risen by 30,000, or 7 per cent, since the start of 2010.
“It doesn’t yet look like there’s a lot of hiring going on,” said Marisa DiNatale, an economist at Moody’s Economy.com.
There may be a silver lining: If the weather does boost reported job losses in February, jobs should snap back in March as hiring that had been delayed takes place and workers return to jobs.
That’s what’s happened after previous weather disruptions. In February 1996, for example, the nation posted robust job gains, a month after a severe snowstorm.