The economy added 215,000 jobs in March, for a 3-month average gain of 209,000 and a past-12-month average of 223,000 new jobs. The U.S. is creating literally millions of new jobs, demonstrating its resilience in the face of strong headwinds, including slowdowns in China, Europe and South America and financial market volatility. As in the NCAA championship, however, upsets can come at any time.  

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Jobs Report: No March Madness

Fri Apr 1, 2016

Unlike this year’s NCAA basketball tournament, with its share of surprises and Final Four drama, the Labor Department’s March jobs report today came in pretty much as expected. The U.S. jobs engine continues to churn out new jobs at a healthy clip and the nation’s unemployment rate remains at or near full employment.

The economy added 215,000 jobs in March, for a 3-month average gain of 209,000 and a past-12-month average of 223,000 new jobs. The U.S. is creating literally millions of new jobs, demonstrating its resilience in the face of strong headwinds, including slowdowns in China, Europe and South America and financial market volatility.

The headline unemployment rate ticked up to 5% from 4.9%, a good news statistical fluke as the labor force participation rate moved up to 63% from 62.4% last fall. An additional 396,000 people entered the workforce in March. The unemployment rate peaked at 10% in 2009.

Even wage growth has perked up, as average hourly earnings grew 2.3% over the past year to $25.43, reflecting the tightening labor market. Employers no doubt are finding it necessary to bid up wages to attract and retain talent.

As in the NCAA championship, however, upsets can come at any time. Even #1-seeded teams can’t take success for granted. So while the U.S. unemployment rate stays low and over 200,000 new jobs materialize each month, there is a potential Achilles Heel. Economic growth remains weak.

Indeed, the Commerce Department’s Bureau of Economic Analysis recently reported that fourth quarter 2015 real GDP growth came in at an annual rate of only 1.4%. GDP measures the value of goods and services produced by the economy. While 1.4% growth is an improvement over earlier estimates it’s still subpar. For all of 2015 U.S. real GDP growth was clocked at 2.4%.

Even more worrisome, estimates of first quarter 2016 GDP growth are flashing amber lights. The Federal Reserve Bank of Atlanta recently forecast first quarter economic growth at 0.6%, dangerously close to stall speed. If GDP growth does not pick up speed, job growth will falter.

Nevertheless, heading into March Madness the U.S. economic team is undefeated. Some 2.8 million new jobs have been created over the past 12 months. Wages are showing signs of life. Inflation remains well-controlled. Interest rates are near all-time lows. What’s not to like about that?