The news on the labor market has taken a turn for the worse. In March, the economy created only 120,000 payroll jobs, a sharp decline from the pace of previous months. On Thursday, the Labor Department reported that first time unemployment claims rose to 380,000 last week.
Not surprisingly, Alan Krueger, the chairman of the Council of Economic Advisers, cautions against reading too much into such data points. "The numbers are volatile," he says in an interview with The Daily Ticker on Wednesday. The monthly unemployment number gets revised and adjusted and "there are going to be ups and downs."
The line from the Obama administration is that the labor market is slowly healing from the catastrophic wounds it suffered in 2008 and 2009 — and that the private sector in particulary is improving. There's some truth to that. The nation's unemployment rate has dropped from its peak of 10.1 percent in the fall of 2009 to 8.2 percent in March, but millions still cannot find jobs, or worse, have stopped looking for work entirely. The labor force participation rate remains at a low 63.8 percent.
The current economic expansion has differed from prior recoviers in one important respect. In the early years of the post-recession expansions of the 1980s, 1990s, and 2000s, the public sector added jobs as the economy grew. That hasn't been the case in the past few years. "This recovery is really unique in that one of the headwinds that it faces is that the public sector especially the local and state governments have been reducing employment," Krueger says. According to the Bureau of Labor Statistics, since May 2010 the private sector has added more than 3.6 million while federal, state, and local governments have reduced employment by one million.Read More »from The Job Market Is Healing Says Obama’s Economic Adviser Alan Krueger