Maybe it was the weather, after all! As the U.S. economic recovery appeared to gain strength in early 2012, a small chorus of naysayers warned that appearances were deceiving: The unseasonably warm temperatures affecting large swaths of the nation offered the real reason for stronger-than-expected hiring. The new government labor report for March lends some unwelcome support for that thesis. Far underperforming the consensus estimates of economists, the U.S. economy created only 120,000 jobs in March, or about half the 212,000 average of the last three months. The unemployment rate ticked down one notch, to 8.2 percent.
We can’t blame government austerity for the disappointing news, either. Public sector payrolls dropped by only 1,000 in March. The main villain depressing numbers, this time around, appears to be the retail sector. Retail trade employment fell by 34,000, almost all of which was accounted for by “general merchandise stores,” aka department stores. That suggests consumer spending may have taken an unexpectedly large hit in March. All that cash diverted to paying for gas might be taking a toll.
Not all the news was bad. The government’s broadest gauge of unemployment, the so-called U-6 measure, which attempts to include part-time workers and persons “marginally attached to the labor force,” fell sharply, from 14.9 percent to 14.5 percent, largely as a result of a significant drop in the number of people employed as “involuntary part-time workers.”
But overall, if you were looking for signs that the recovery is set to run out of steam, just as it did in 2011 after encouraging signs of growth at the outset of the year, now you’ve got them. You can bet that Mitt Romney will jump all over these numbers. If Friday’s report signals the beginning of a new downward trend, and not a momentary blip, the nascent consensus that economic recovery was likely to boost President Obama’s reelection prospects just took a major hit.