US Employment Stumbles, Recession Fears Rise

Friday’s US Bureau of Labor Statistics employment report has sparked significant debate among economists and analysts. While the government and corporate media outlets continue to tout the creation of 275,000 jobs in February as a sign of robust economic health, a deeper dive into the data reveals a more troubling picture, especially considering the unemployment rate’s rise to 3.9%.

Firstly, it’s critical to understand the disparity between the establishment survey, which reports job numbers, and the household survey, which calculates the unemployment rate. The latter indicates a more concerning trend: a decrease of 184,000 employed persons in February alone. Over the past three months, nearly 900,000 jobs have vanished, and the scenario is grimmer for full-time positions, with a significant decline for three consecutive months.

Moreover, the composition of job growth raises red flags. Government jobs accounted for approximately 20 percent of February’s job increase — a ratio that history suggests may portend a looming recession. This is because in periods of robust economic health, government employment typically constitutes a much smaller fraction of total job growth.

Adding to the concern, the Federal Reserve appears hesitant to begin reducing interest rates, a move that could signal confidence in economic recovery. Instead, the current data could lead to continued high rates, impacting consumers significantly, as seen in rising costs for loans and credit.

Furthermore, negative revisions to previous months’ job figures hint at a job market that may not be growing at all. Economist David Rosenberg points out that, after adjustments, the February job figures actually reflect a contraction in the labor market. Additionally, despite some areas of hiring strength, layoffs are increasing in sectors like technology and banking. At the same time, employment in temporary help services — a leading job market indicator — has continued to decrease.

While the establishment narrative continues to suggest a “soft landing” where the economy gently decelerates to avoid a recession, historical evidence and current indicators tell a more troubling story. The manufacturing sector is losing net jobs as the nominal increase in average hourly earnings continues to fuel price inflation. Despite the Biden administration’s ongoing and misleading claims that inflation is “coming down,” the annual rate remains well above the 2% target established by the Federal Reserve.

Critically, the gap between the establishment and household surveys points to a disconnect between reported job creation and the actual employment situation for Americans. The surge in government roles does little to reassure those seeking sustainable, full-time employment in the private sector.