The press is mostly thrilled over yesterday's Employment Situation Summary from the government, which reported that the unemployment rate stayed at 4.9 percent and that the economy added 242,000 seasonally adjusted payroll jobs. President Barack Obama took the opportunity to take what CNBC's Jeff Cox described as "a victory lap ... in Friday remarks to the media."
Well, why not? Obama was secure in the knowledge that the establishment press would mostly play along, even though February's larger number of private-sector workers put in 16 million fewer hours per week and earned $540 million fewer dollars per week than those who were employed in January.
Josh Boak's 8:41 a.m. Friday report at the Associated Press (saved here for future reference, fair use and discussion purposes) described February's news as "another solid month for the resilient American job market." Reuters saw it as "the clearest sign yet of labor market strength that could further ease fears the economy was heading into recession." Only Bloomberg threw a bit of cold water on the parade with the following headline: "Payrolls in U.S. Surge While Wages Drop in Mixed Jobs Report."
Because of its vast subscriber base, the AP report was certainly yesterday's dominant narrative. Boak produced what was apparently supposed to be a bigger picture item Friday afternoon, and went into full-cheerleader, no-recession mode:
Strong US job growth in Feb. helps dispel recession fears
A robust February jobs report showcased a resilient U.S. economy just as fears of a new recession had begun to surface.
Economic reports in recent weeks had fueled anxieties about a looming downturn: Manufacturers were slumping. Stocks had plummeted. China was slowing sharply along with other emerging markets. The rising dollar had crushed exports.
But last month, U.S. employers sent a clear message of confidence. They added a healthy 242,000 jobs, while the unemployment rate held at a low 4.9 percent, the government said Friday. The gains showed that the economy is surmounting its challenges without suffering much damage.
"Neither global headwinds, financial turbulence nor political uncertainty has dimmed American business' enthusiasm for hiring," said Sal Guatieri, an economist at BMO Capital Markets. "The solid jobs report should allay recession fears."
Not so fast, guys. A recession occurs when output goes down for two quarters or more. Output obviously depends heavily on input, and there was definitely less weekly input of labor in February:
February saw the second-highest monthly shrinkage in weekly hours since the economy stopped consistently losing jobs in February 2010. With 4.2 business weeks in February, those who worked in the private sector in February, even though there were more of them, put in about 69 million fewer hours — and an hours reduction across the entire private-sector economy of 0.4 percent is nothing to shrug off.
Additionally, those who were working in February earned 3 cents less per hour than those who were working in January. The combined impact of the lower pay and fewer hours meant that the average worker's gross weekly pay dropped by $6.11 from $878.15 to $872.04— the largest such drop by a substantial margin seen in the ten years the government has been tracking such data. If their weekly pay had only stayed the same as seen in January, February's workers would have earned over $3.1 billion more (121,518,000 workers times $6.11 per week times 4.2 weeks). Instead — again, despite their larger numbers — they earned almost $2.3 billion less than those who worked in January:
Thus, there was not only less raw input in hours, but the value of that input — at least in terms of what employers were willing to pay for it — fell even more.
If this scenario were to continue for six months, the economy would almost certainly be in the midst of an ugly recession.
One month's weakness in hours worked and total pay doesn't demonstrate that we're in the midst of or on the verge of a recession. But it also does nothing to support the claims made above and elsewhere by reporters and their "experts" that February's jobs report shows that fears of a recession are overblown.
Finally, as to Boak's claim that "employers sent a clear message of confidence" as they reduced weekly hours and pay — give me a break.
Cross-posted at BizzyBlog.com.