Jobless Rate Holds Steady, Raising Hopes of Recovery
By PETER S. GOODMAN and JAVIER C. HERNANDEZ
Copyright by The New York Times
Published: March 5, 2010
The American economy lost fewer jobs than expected last month, bolstering hopes that the worst may finally be over in the wrenching event known as the Great Recession.
Job seekers are shown waiting to enter the UJA-Federation of New York’s job fair this week.
The monthly snapshot of the job market released by the Labor Department on Friday was hardly cause for celebration: about 36,000 jobs disappeared from the economy in February, while the unemployment rate remained unchanged at 9.7 percent.
Yet compared with monthly job losses of more than 650,000 a year earlier, and against a backdrop of recent news viewed as pointing to the possibility of a slide back into recession, most economists construed the report as a sign that a tenuous recovery might be gaining momentum.
“It’s strikingly good,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, who has been skeptical about earlier signs of recovery. “It’s much better than it had been looking.”
The February job losses followed a drop of 26,000 in January. Most experts now expect the economy to begin steadily gaining jobs during the spring, as employers edge toward hiring.
But even as the report eased worries that the economy might tip back into decline, it did little to dislodge the widespread notion that the recession had given way to a tepid and tentative expansion, one unlikely to significantly cut the ranks of the jobless.
Nearly 15 million Americans were unemployed in February, and four in 10 had been there for six months or longer. The so-called underemployment rate — which counts people whose hours have been cut along with those working part time for lack of full-time positions — reached 16.8 percent, up from 16.5 percent in January.
Some labor experts say the downturn has accelerated a refashioning of the economy that has been under way for decades, eliminating jobs in less competitive industries — particularly manufacturing, and more recently, housing construction and financial services. In this view, many of those jobs are unlikely to return regardless of growth.
Yet, in other industries, jobs are already returning at a much faster pace than after the last two recessions, according to research by Lakshman Achuthan, managing director of the Economic Cycle Research Institute.
“It’s almost two separate Americas,” he said, meaning that much of the work force is already seeing the return of work opportunities, while those mired in long-term joblessness are facing the worst prospects since the Great Depression. “They have been left behind, and their problems are not solved by recovery.”
In Beaumont, Calif., nearly two years have passed since Rebecca Miranda lost her job as a hospital recruiter, losing her paycheck of about $4,000 a month for a $1,500 monthly unemployment check.
A single mother of a 2-year-old girl, she is barely paying her bills, while worrying that her exile from the workplace has eroded her worth. “I’ve been out of work so long, I’m going to be the last kind of person they are going to hire,” she said.
President Obama greeted the jobs report while touring a Virginia company that produces software aimed at helping lower energy use. There, he highlighted his administration’s embrace of cleaner-burning ventures as a way to create jobs.
“The country that leads in clean energy and energy efficiency today, I’m absolutely convinced, is going to lead the global economy tomorrow,” he told reporters. “I want that country to be the United States of America.”
On Wall Street, investors welcomed the jobs report, and stocks rose over 1.2 percent on Friday.
Labor experts say the economy must add more than 100,000 jobs a month just to keep pace with new entrants to the work force, so even a sustained surge in hiring would leave joblessness and anxiety for years to come.
“We’ve really hit the bottom, but we haven’t embarked on a robust recovery,” said Kathleen Stephansen, chief economist at Aladdin Capital Holdings.
Manufacturing added 1,000 jobs in February, on top of a larger increase in January, but some experts say that trend will soon wane because businesses that slashed inventories are merely rebuilding their stocks. Health care and education — both stalwart sources of growth throughout the downturn — added a net 32,000 jobs.
Construction lost 64,000 net jobs in February after a modest improvement in January.
The monthly jobs report is the dominant economic indicator and the subject of considerable debate among professional economists seeking to divine its message. The February report came draped in special uncertainty given heavy snowstorms during the month, slowing business.
In years past, job reports in snowy months have come in weak, then subsequently been revised upward sharply, a pattern that may hold this time.
But the report did little to resolve contrasting views of the basic dynamics at play, with economists in roughly two camps. Some say a now-tepid economic recovery will eventually become vigorous; others envision a long slog through relatively anemic growth. Optimists point to modest expansion on the factory floor and continued increases among temporary workers (whose ranks rose by 48,000 in February) as a sign that commerce has reawakened.
Even if manufacturing is merely growing because of a shift in inventories, they say, that is translating into paychecks that workers will spend at other businesses, generating new jobs.
In what some economists took as a sign that such an upward spiral had begun, raising confidence, consumer credit expanded by $5 billion in January, a 2.4 percent annualized rate, the Federal Reserve announced. That rise was led primarily by auto loans.
But others point to uncertainties gnawing at businesses and households as portents of subdued growth. After years of borrowing against home equity to finance buying sprees, many households are tapped out.
Housing prices fell in January, prompting worries of another downturn that could hit homeowners and banks — a fear enhanced by a growing wave of foreclosures.
Uncertainty itself is spawning uncertainty: Even healthy businesses are deferring expansion until they are sure of a recovery.
In Adrian, Mich., Brazeway, a refrigeration tubing manufacturer, has trimmed its work force more than 30 percent in the last two years, and now has about 900 employees.
Even as orders and production expand, Brazeway remains cautious about hiring, bringing on mainly temporary workers. The company has added only three permanent positions.
“We have people beating down our doors for jobs,” said its chief executive, Stephanie H. Boyse. “We’re in this mind-set of adding only the absolute must-haves, and the nice-to-haves stay on the back burner.”
Javier C. Hernandez contributed reporting.