The Resilience of the U.S. Private Economy

I mentioned this in my earlier report: "Unemployment Rate Holds at 8.3 Percent in Longest Jobs Slump Since Great Depression."

See the comments at Wall Street Journal, "The Jobs Rally":

Sometimes you simply have to marvel at the resilience of the private economy in America, and yesterday's upbeat jobs report was one of those moments. Employers shook off the dysfunction in Washington and added 227,000 new workers in February.

The December and January jobs numbers were also revised upward by 61,000 hires. Almost every part of the economy is healing, with job gains recorded in manufacturing (31,000), business services (82,000), leisure and hospitality (44,000) and health care (61,000). Only construction (-13,000) is still limping, as the housing depression lingers. The all-important labor force participation rate—the share of employable adults working—ticked up to 63.9%, though it is still near a 20-year low....

There are a few troubling signs worth keeping an eye on. The unemployment rate for Hispanics (10.7%) and for blacks (14.1%) rose in February. The black unemployment rate is now almost twice the rate for whites, and those without a college degree are still more than twice as likely to be unemployed than those with a diploma. The recovery may be bypassing part of President Obama's voting base: minorities and those with low skills.

The unemployment rate of 8.3% is still historically very high. The long-term unemployed—those without jobs for six months or more—is still over five million, which is 42.6% of all jobless workers. If we hadn't seen about three million people drop out of the job market since 2008, the reported unemployment rate would be closer to 10.8%. And hourly earnings growth over the last year of 1.9% is running a full point below inflation, a cost-of-living squeeze that is getting tighter with higher gas prices.

The U.S. will need to sustain this pace of job growth for at least two more years to get unemployment below 7% and to recover the five million net loss of jobs since 2007. ObamaCare's mandates on businesses, the $1 trillion annual federal deficit forecasts and the huge tax hikes coming on January 1, 2013 are a few of the governmental impediments to job growth that lie ahead. The challenge for the economy now will be whether employers continue to hire in the face of those headwinds.