The economy added more than 200,000 jobs for the third consecutive month, as 227,000 jobs were created in February. The unemployment rate was unchanged in February, ending the month at 8.3%.
Not only were the February results positive, but more jobs were created in January than previously reported, as the estimate was revised sharply upward to 284,000 for the month.
While job growth cooled from last month, today’s release marks the best three-month period for job creation in nearly two years. The trend in job creation in the past few months has been undeniably positive, but not without some nagging anxiety.
Two lingering questions restrain a greater sense of optimism: have the numbers been statistically distorted and will the recently better pace of job creation stall out again as has been the case in recent years as the economy has struggled to maintain momentum?
Concerns have been raised about distortion in the numbers resulting from the underlying assumptions in the seasonal adjustments. The expected impact of those seasonal adjustments should diminish over the next few months and the impact of any distortion that has occurred may become more evident.
Job creation is a lagging indicator, and this surge in job creation shouldn’t be surprising given the acceleration in the pace of GDP growth in the fourth quarter.
Continued improvement in job market conditions should provide a boost to consumer confidence. However, any boost to consumer spending may be constrained by higher gas prices and stagnant wage growth.
Can the economy continue to accelerate given rising energy costs and the pervasive slowdown outside the United States? The economy will have to demonstrate some serious resilience to simply shrug off these factors in the months ahead.
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