The Labor Department surprised everyone yesterday when it reported that a lot more jobs than expected were created in February.
President Obama and Federal Reserve Chairman Ben Bernanke, in fact, were probably shocked — and not in a good way.
You’ll see in today’s headlines that 236,000 jobs were created last month. And, if you take away the seasonal adjustments, employment grew by more than 900,000 jobs. The unemployment rate declined to 7.7 percent, from 7.9 percent.
In a minute, I’ll go through the flukes in the report. As you probably know from reading my columns, there are always flukes corrected later when nobody is paying much attention.
But this time the numbers made public by the Labor Department — and not what lies beneath those numbers — have the most significance.
You’ve likely heard that Obama and Congressional Republicans are locked in a battle over the federal deficit. On March 1, in fact, $85 billion in government spending cuts began. The president took to the stump to explain how much of a hardship these cuts will be on the American public.
In fact, both he and Bernanke said 750,000 jobs would be lost because of those $85 billion in cuts.
Then, (surprise!) one week later the Labor Dept. announces that the economy actually created a decent number of jobs.
Yesterday’s 236,000 increase is a blow to the area below Obama’s gut. It’s hard to fully rev up fear in people about the job market when they’ve just heard that things may be getting better.
Americans, after all, remember only the last message that they’ve heard.
And Republicans will take the February jobs figure as proof that more budget cuts, past the $85 billion, won’t hurt the US public, which is frantic about federal debt and will probably buy that message for a while.
And Bernanke? He’s battling with other members of the Federal Reserve’s Open Market Committee over whether to continue full-speed ahead with a dangerous monetary program called quantitative easing.
Under QE, the Fed has printed trillions of dollars in new money to purchase government bonds — all the time hoping nobody realizes how inflationary and dollar-damaging this can be.
Unfortunately, a growing number of other members of the Fed have noticed. They’ve been clamoring for Ben to scale it back.
The decent jobs report is going to supercharge Bernanke critics. And the financial markets don’t like growing dissension at the Fed. It makes them very nervous.
O.K., that’s the lowdown if you just scratch the surface of the February numbers. Now, let’s dig a little deeper.
First off, these early-in-the-year booms have become a regular economic pattern. In 2012, for instance, there was a seasonally adjusted gain of 582,000 jobs when January and February were combined, with most of that increase coming in the first month of the year.
The markets reacted positively in 2012, but growth waned and the economy was barely moving forward by the end of 2012. So you might want to hold the confetti until we’ve had a couple more months of better job growth.
And what about those $85 billion in budget cuts? The sequester, as it is called, will eventually cost the economy jobs.
So the president may be disappointed for political reasons that the impact wasn’t swifter, but it will happen.