Here’s a sentence that was rarely, if ever, written during the Obama presidency: The latest jobs report blew economists’ expectations out of the water.
In the years immediately following the Great Recession, when job growth should have been at its peak, the United States was nevertheless treated to a string of disappointing jobs reports. Economic growth was slower than expected, jobs weren’t being created as fast as anticipated, the workforce was shrinking more than was hoped for, and wages were stagnant. This, we were told then, was a “new normal.”
Well, turns out that was the Obama normal.
Under President Trump we’ve been treated to plenty of positive economic surprises, the result of a growth-focused agenda that streamlined taxes, removed regulations and leveled the playing field with foreign competitors. The results speak for themselves.
U.S. employers added 313,000 jobs last month, an incredible jump from the 200,000 that economists had been expecting. The jobs gains weren’t concentrated in any one sector. Of the 313,000 jobs, 92,000 were in the construction and manufacturing sectors, while 50,000 came from the “professional and business services” sector, which includes lawyers and accountants.
“Blue-collar sectors drove these gains, led by mining and construction. Manufacturing is now outpacing the economy overall, and even retail had a strong February,” said Jed Kolko, chief economist with job search site Indeed, in a note titled “Almost Nobody Left Behind in February’s Jobs Report.”
In addition, the report showed that 806,000 Americans joined the workforce last month, one of the biggest increases in 35 years, and a sign that many workers who had previously given up on finding a job are back in the labor pool.
“These numbers are remarkable,” Ward McCarthy, chief financial economist at Jefferies, told CNBC. “806,000 people came back into the labor force and 97 percent of them found jobs. If you want a job you can get one. This is about as much as you can expect. … We’ve waited 10 years for this, and here we are.”
All told, the number of employed Americans rose to 155.215 million, the highest in history. African-Americans were the biggest winners. According to the Bureau of Labor Statistics, African American unemployment is at its lowest level, both in terms of absolute numbers and percentage, since 2001.
Some economists argue that this jobs report is the product of the significant tax-cut that Republicans passed at the end of last year. The tax cut is putting more money in businesses’ pockets, which is being reinvested in capital and new hires, the theory goes. Others argue that this is more than just a stimulus, this is businesses responding to the creation of a more favorable economic atmosphere. As Danielle Maquette reports for the Washington Post:
“Really for businesses, what matters is demand for their products,” she said. “If demand for products hasn’t gone up, there’s not more work for these companies to be doing.”
Josh Wright, chief economist at iCIMS, a hiring software firm, said companies might just be ramping up for a potentially sunnier business climate.
“It’s more about increased confidence,” he said. “They like the outlook for growth and how supportive federal policy will be for it.”
If there was one small disappointment in the report it was that wages continued to go up, although at a slower pace than in January. However, with job gains like those included in this report any slack in the worker pool will soon be pulled taut. And as employers are forced to compete for scarce labor, higher salaries will inevitably result. In the meantime, we can enjoy the benefits of a “Goldilocks” economy, i.e. one that isn’t “overheating,” as indicated by rampant inflation:
The surge in job creation coming without an accompanying rise in wage pressures fits in well with the Wall Street hopes of a “Goldilocks” economy.
“The labor market tightens but wage growth moderated. Good news for both sides of the street, Main Street and Wall Street,” said Quincy Krosby, chief market strategist at Prudential Financial.
Welcome to the new normal. This time, courtesy of President Trump.