According to payroll-processing company ADP, over 209,000 private sector jobs were created in March. That marks the fourth straight month of 200,000+ jobs being created. Around 125,000 jobs are needed each month just to keep pace with population growth. The number is slightly less than experts were expecting, but strong nonetheless. At this pace it will take a few years to reach the pre-recession levels of unemployment which were around 5%.
Small businesses powered the job creation once again. Over 100,000 jobs were created by companies with fewer than 50 employees. Big companies with more than 500 employees added 22,000 new employees. Medium size businesses with 50-500 employees added 87,000 workers. The government is expected to lose another 10,000 jobs.
Economic numbers continue to point towards a growing recovery. March also saw great car sale numbers for Detroit and foreign automakers in the US. Consumer spending has been up despite stagnant wages. This shows that credit lines are beginning to free up. This may not be such a positive trend, as over extending credit is one thing that got the US into the previous financial crisis in the first place. If it manages to get the country out of the slump, though, it may be worth it in the short run.
The numbers will be music to the ears of the Obama administration. With Mitt Romney all but sealing the Republican nomination last night with three big primary wins, President Obama will have some firepower to open the general election campaign. The economy has been the GOP’s main talking point against the president. With jobs being created every month and the unemployment rate plummeting, conservatives figure to pivot to high gas prices which could endanger the nascent recovery.
Though the signs are pointing towards a true recovery this time after some hiccups the past few years, it sits on a fragile foundation. Several factors could slow down or trip up the economic upturn. The most pressing concern is high energy prices. Gas is closing in on $4 a gallon nationally and it is only April. Prices normally peak during the summer driving season. If gas goes to far above $4 a gallon it would have serious implications for the economy.
War in the middle east could have disastrous effects as well. Though the tension between Iran and the US (and Israel) seems to have died down a bit lately, the threat of war still looms over us all. A war between either the US or Israel and Iran would probably cause energy prices to sky rocket. A price shock in gas could cripple the recovery.
Economic weakness abroad is another major concern. Europe is having a tough time due to its sovereign debt crisis. The US stock market was having trouble late last year and early this year due mostly to European concerns. Those concerns seem to have passed for now, but trouble in the Euro zone is still a major threat. Economic slowdown in China is another problem. We now live in a global economy, and weakness abroad affects us here in the US. When demand in those areas go down, that lead to less exporting for the US.
For now the signs are all good. The hope is that job creation will pick up further to 300,000 or 400,000 jobs created per month. That would lower the unemployment rate in a hurry. At the current rate it will be years before we reach full employment again. While that is certainly an improvement over the scenario we were facing just a few months ago, it is still no solace to those who remain without work.