We had a nice gain of 223K but the big news is in the revisions especially January which was taken up to 284K.
That’s a big deal because it breaks – what feels like to many economists – an intuitive barrier on job creation. Practically speaking the economy behaves as if it has a lot of inertia, particular in job creation. Its hard to see numbers like that and not think the underlying momentum is moving forward.
A couple of things I want to say
1) Quick glance over the internals seems to suggest we are still losing construction jobs and government jobs. In addition, non-durables have been flat which is of no surprise.
However, especially government and construction light a clear path to how this could be sustained and by my estimates would accelerate if oil prices and the Fed played along.
2) Brad Delong notes how this is not consistent with Okun’s Law. There are a lot of reason I wouldn’t worry about Okun’s law but one of the big ones is the following.
3) It should not shock anyone to see labor productivity go into decline over the next year. Not just low number, but robustly negative numbers.
This is because when I look at the world I see a world where technology may rapidly declining.
Now, that doesn’t mean “tech” is rapidly declining. The most powerful technology we had was called “growing computer hardware in Wall Street Office buildings”
Basically we had some Wall Street quants cook-up securitized mortgage products, which we then shipped to China and low and behold they shipped us back Iphones in return.
Growth in that technology has come to and end and there is some evidence that it may begin reversing itself. This will mean technological decline for the US. It, however, would be consistent with a GDP-less recovery.