April Jobs Day Preview

Today is Jobs Day, the release of the Bureau of Labor Statistics’ Employment Situation Report for March with revised data for January and February. The consensus forecast is for 204,000 new jobs in March on the establishment survey of nonfarm payrolls. Since the revisions matter, I think it might be more useful to think about net increase in the level of payroll employment with the revisions factored in. Since everyone is expecting continued growth, we should expect the revisions to be upward in direction as the establishment survey methodology all but guarantees that the BLS will initially underestimate systematic change.

The big analytic issue people are looking to regards the weather. It’s clear that an unusually warm winter boosted job creation over the past three months, but it seems unlikely that March weather could have the same effect. The conventional view is that this means we’ll see a March and April phaseout of that stellar winter job growth. I think that may be a mistake and that under the unusual conditions of a depressed economy with zero interest rates that the winter boost is permanent. The other factor is simply that there were points in 2010 and 2011 when it also looked to people as if the economy had turned a corner. But both times that sense of corner-turning fed policymaker complacency and then it turned out that bad luck (tsunami, “Europe”) happens just as often as good look and next thing you know we were back in the ditch. The March Fed minutes offered a clear sign of a potentially dangerous return of the spirit of complacency.