No one seems to have a good explanation for why the recovery has taken a nose dive around the same time each year. Sheer coincidence seems to be economists’ best educated guess. But the swoons underscore just how ephemeral a turnaround can feel.
“The problem is we haven’t been able to go steady-strong,” said Diane Swonk, chief economist of Mesirow Financial. “It’s in fits and starts, and we can’t get beyond that.”
The spring swoons have been primarily felt in the job market. This year, for example, the economy was adding an average of more than 200,000 jobs a month in the winter before that total plunged to 88,000 in March. Job growth was cut roughly in half during previous swoons.
At first, economists wondered whether the problem was purely technical. The 2008 financial crisis upended mathematical models for how many people are hired and fired on a normal basis, resulting, they hypothesized, in artificial boosts in the fall that evaporated by spring.
But that explanation for the swoon was almost too easy — and certainly too optimistic. It turns out the trouble lay not in the data but in the real world.
In 2011, the problem was international. A tsunami in Japan coincided with a financial crisis in Europe that pushed Greece into default and almost caused a collapse of the continent’s common currency. Last year, economists blamed the weather. The mild winter, they said, siphoned away traditional springtime jobs.
This year, all fingers are pointed at Washington.
Fearing federal tax increases scheduled to take effect in January, employers appear to have showered workers with bonuses and other extra compensation in December. Data from the Commerce Department show personal incomes jumped 2.7 percent that month, the fastest monthly increase since the 2009 stimulus bill.
The extra income probably boosted retail sales in January and February before the quick fix faded. Meanwhile, an increase in the payroll tax means the average worker will pay roughly $1,000 more over the course of the year.
The impact of those changes became clear in March, when retail sales fell 0.4 percent compared to the previous month. Electronics retailers, department stores and even auto dealerships all experienced declines. The drop-off was particularly troubling because consumers are the engine of the nation’s economy, driving about two-thirds of the gross domestic product.