February jobs report: ‘Let’s call it a recovery’

There’s quite a bit of good news — and very little bad — in February’s jobs report.

The U.S. economy added 227,000 jobs last month, according to the Bureau of Labor Statistics’s monthly report. That was above economists’ expectations of 210,000 new jobs. And there were even more encouraging signs in the data revisions for previous months. The economy actually added 284,000 jobs in January, according to BLS, rather than the initial estimate of 244,000. December was revised upward from 203,000 jobs to 223,000. That’s an additional 78,000 jobs that economists weren’t expecting. The labor market is healing more quickly than we thought.

Some of the broader indicators are encouraging, too. The employment-to-population ratio is up one-tenth of a percentage point to 58.6 percent. The number of people who are “long-term unemployed” — that is, who have been out of work for more than 27 weeks — fell from 5.5 million to 5.4 million. (Although that’s still an enormous number by any metric.) Over the past year, average hourly earnings are up 1.9 percent. And temporary hiring has surged to 45,000, which often presages an increase in permanent hiring.

There are also some reasons to think this recovery can sustain itself through 2012. Ever since the recession ended in mid-2009, the U.S. private sector has been consistently hiring workers. It’s just that the public sector has been hemorrhaging employees — around 500,000 government layoffs since Obama took office. But that trend finally appears to be winding down. In 2011, governments at all levels were shedding 22,000 jobs each month. That’s a lot of extra unemployment. But in January and February, governments cut just 7,000 jobs total — a negligible amount. Austerity has taken its toll on states and municipalities, but it no longer seems to be holding back the labor market.

The U.S. economy is still in a large hole. Right now, we’re adding around 250,000 jobs per month. If that trend keeps up, it’s enough to get us to 8 percent unemployment by election day. That would bode well for President Obama’s reelection chances. But 8 percent unemployment is still unnervingly high. As the Hamilton Project has found, at the current pace we won’t bring back all the jobs lost from the recent recession until sometime around 2020 or so. A separate analysis from the Economic Policy Institute, which used different assumptions about labor force growth, argued that it would be closer to 2018. Either way, a long time.

Risks remain, of course. Right now, sky-high oil prices don’t seem to be crushing the economy — see UC San Diego’s James Hamilton’s analysis for some possible reasons why — but a war with Iran could send crude prices soaring even further and change all that. Europe isn’t likely to throw any more financial surprises at us until November at the earliest. Congress doesn’t have too many more chances to squeeze budgets further in 2012, unless they somehow let highway spending lapse.

But, for now, the economy looks to be in decent shape. As Justin Wolfers sums it up, “Let’s call it a recovery.”