We Are Not Out of the Economic Woods Yet

For a while, recently, it looked as though the U.S. economy could create something on the order of 250,000 jobs per month, which got economic analysts thinking and hoping that at long last, the United States had turned the employment corner and would soon reach full employment–or something resembling full employment, at any rate.

Those hopes took a serious hit, recently:

The sputtering U.S. economy created just 126,000 jobs in March as bad weather, weak consumer spending and flailing corporate profits resulted in the worst report since December 2013.

Economists expected nonfarm payrolls to rise 245,000 in March, with the unemployment rate holding steady at 5.5 percent, according to Reuters. February’s numbers were revised lower to 264,000 from the initially reported 295,000, while January’s number fell from 239,000 to 201,000.

The total fell well short of the 269,000 average over the past year and was the first time in 14 months that the number dropped below 200,000.

About the only good news in the recent jobs report was that “[a] separate gauge that includes those who have stopped looking for work as well those employed part-time for economic reasons—the underemployed—edged lower from 11 percent to 10.9 percent.” But the news is still fairly bad, all around.

So, it really isn’t a good time to think of raising interest rates, and the Federal Reserve should banish such thoughts for the time being. The American economy has come a long way from the dark days of the Great Recession, but we still have much further to go before we can legitimately worry that an overheating economy might lead to inflation and the need to increase rates.

Incidentally, recall that in the 2012 presidential election, the Obama campaign told us that if they were given another four years, they would finally get the hang of this economy thing, and we would have smooth sailing on the jobs and economy front. This talk, of course, vastly overstates the influence that an American president usually has on the economy and the employment picture, but notwithstanding that fact, the Obama administration has actually done rather little to bring about smooth economic sailing. To the extent that any governmental institution has prevented a bad situation from getting worse, it has been the Federal Reserve; the actions of Ben Bernanke and Janet Yellen have been laudable-verging-on-heroic, and history will remember that fact. But Team Obama itself has done rather little to improve our economic lot.

I know, I know; it should surprise precisely no one to find out that we have yet more broken campaign promises on our hands. Still, I thought that fact is worth mentioning.