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6 questions on the jobs report

By Mark Hamrick ·
Wednesday, April 2, 2014
Posted: 5 pm ET

The Labor Department on Friday releases its report on U.S. employment during March. Here are six key questions surrounding the jobs picture.

1. Is weather still playing a starring role?

Not since the Great Flood that inspired the biblical passages involving Noah and the Ark (not to mention giving actor Russell Crowe another starring role) has the weather been talked about in such dramatic terms.

Payroll gains were weak in December and January, only to rebound to 175,000 jobs in February. Economists think the March payrolls number should be close to 200,000 jobs.

2. Do businesses have too much stuff?

Economic weakness isn't entirely about the weather. There's a growing line of thought that some of the recent softness involves overbuilt supplies on business shelves and back lots. In short, businesses have too much stuff.

"Firms did make a lot more stuff. They were thinking it was going to get bought, and it didn’t get bought so now we are sitting around with lower levels of production," says Robert Brusca, economist with FAO Economics. Firms have been "waiting for people to buy this stuff, but consumer spending hasn’t been particularly good," he adds.

3. Was the year really off to a lousy start?

Economists think that growth in the first quarter was well below 2 percent. That's subpar. Bank of the West economist Scott Anderson estimates that the gross domestic product grew by 1.5 percent.

As Brusca puts it, "2 percent is a very low hurdle." Still, we might not have cleared that hurdle during the first three months of the year. Once we get the March jobs numbers on Friday, we'll have a better view of growth.

4. Is the Fed still focused on a jobless 'threshold'?

Until the March Fed meeting, the central bank had said 6.5 percent unemployment was an important threshold for the job market. But even "well past" reaching that point, it was prepared to keep interest rates low.

Under the leadership of Chair Janet Yellen, the Fed is suggesting that additional repair is needed before it will begin to think seriously about lifting rates from their record low levels. All of this also means Fed policy has become somewhat murkier. The unemployment number may help to clarify things.

5. Will there be a 2nd quarter rebound?

Waiting for a sustained pickup in the economy has become a little like waiting for the Chicago Cubs to win the World Series again. People figure it has to happen sometime, but the waiting is getting ridiculous.

Many economists think we'll see improvement soon. Anderson says 3 percent growth for the current, second quarter is "is a conservative estimate." He says, "We could be above that if we get a normal bounce from the weather."

As for the Cubs and the World Series, we'll get back to you on that.

6. Will you get a raise?

Puny wage gains have become the new "American Way." You can blame it on the financial crisis: Most Americans haven't had much in the way of wage gains since the bubble burst in 2007.

Through February, the Labor Department says average hourly earnings had risen 2.2 percent over the previous year. Economist Anderson says if the job market continues to improve, wage gains should follow.

"It really depends on what sector you're in and what part of the country you're in," he cautions.

What are you watching with the economy and the job market?

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Follow me on Twitter: @Hamrickisms.


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