The numbers released Friday by the Labor Department clouded such optimism. Anemic job growth in March fell short of even lowball predictions, and economists were preparing for weaker results through the summer.
“We can’t break out,” said Stuart G. Hoffman, chief economist at PNC Financial Services Group. “This is the old two or three steps forward, one step back.”
March was the month that the sequester took effect, though most spending reductions aren’t expected until later this spring.
The employment data showed that professional services, which includes many government contractors, added 51,000 jobs in March. The federal government shed only 2,000 jobs, not counting the U.S. Postal Service. That agency lost 12,000 jobs, according to the Labor Department, though the cuts were not related to the sequester.
The nonpartisan Congressional Budget Office has estimated that the sequester will cost the economy 750,000 jobs, though several private economists believe the loss will be significantly smaller.
In a statement, the White House warned of the impact of what it called Washington’s “self-inflicted wounds.”
“While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a head wind in the months to come,” said Alan B. Krueger, head of President Obama’s Council of Economic Advisers.
The sequester is the product of the gridlock in the nation’s capital over balancing the federal budget. On Friday, Republicans blamed the president’s unwillingness to cut entitlement programs as the key roadblock to an agreement.
“At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances,” said House Speaker John A. Boehner (R-Ohio).
Economists worry that Friday’s job data signals that the economy is in a weaker position than previously thought. Job growth during the first two months of the year was exceptionally strong. In fact, the Labor Department on Friday increased its estimate of the number of jobs created in January and February by 61,000.
Several top officials at the Federal Reserve had even begun suggesting that the recovery was close to sustaining itself, allowing the central bank to dial back its stimulus efforts as early as this summer. San Francisco Fed President John C. Williams said this week that the central bank’s $85-billion-a-month bond purchases could end altogether this year, assuming continued momentum.