Today’s unemployment numbers certainly stuck a somber note. The nation is estimated to have added only 88,000 jobs in March. But this comes on the heels of an upward revision to February’s numbers; the nation added 268,000 in February, a respectable pace of hiring. Mark Zandi Chief economist at Moody Analytics summed it up very nicely “The job market continues to improve, but in fits and starts”.
The stock market swooned early on the news as would be expected. News like this makes people concerned that the economic recovery is faltering and growth rates may not be sustainable or able to actually increase going forward.
Unemployment can be structural or cyclical in nature. We hope for the latter as it means that unemployment will continue to fall as we move through the business cycle, out of recession and toward more robust economic growth. But there is always an element of the former, structural unemployment caused by a mismatch of available skills to available jobs or by the changing availability of good jobs due to the decline in domestic manufacturing coupled with job loss from automation of all sorts. If you have 4 minutes to invest this audio clip from NPR does a good job of explaining the two.
Clearly we have elements of both types of unemployment in our economy and so far the evidence points to a continuing cyclical recovery even as we wrestle with the more structural issues caused by the off-shoring of jobs. “Fits and Starts” is usually the way the economy progresses and many economists are optimistic about our continuing recovery as we move into late 2013 and into next year.