Americans hiring and spending again

What happened

Encouraging reports on consumer spending and jobs last week indicated that an economic recovery is truly underway, but economists warned that it may take years to replace the 8.5 million jobs lost in the recession that began in 2007. The Labor Department reported that employers added 162,000 jobs in March—the biggest boost in three years. The unemployment rate, though, remained unchanged at 9.7 percent, in part because previously discouraged workers resumed seeking employment. Government hiring for the 2010 census produced 48,000 of the new jobs, and an additional 275,000 short-term census jobs will come online in coming months. Despite the positive news, the White House was careful not to raise expectations for a major improvement in the labor market, which must add 100,000 jobs per month just to account for new people joining the workforce. “We are beginning to turn the corner,” said President Obama. “It will take time to achieve the strong and sustained job growth that we need.”

Consumer spending also appears to be slowly coming out of a state of shock. Sales of luxury goods climbed 22.7 percent in March compared with one year ago, auto sales spiked, the Consumer Confidence Index rose, and the savings rate declined—all signs that shoppers are returning to stores. Overall consumer spending data indicated a modest 0.3 percent rise in February, the fifth consecutive monthly gain. “There’s a true desire to buy that I haven’t seen in two or three years,” said retailing analyst John D. Morris. “The consumer’s gotten a little bit braver.” Household purchases account for roughly 70 percent of the U.S. economy.

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What the editorials said

This is “the best news to come to the sagging American economy” in years, said the Raleigh, N.C., News & Observer. Republicans are sniping at the figures, but “jobs gained are infinitely better than jobs lost.” Give credit where it’s due, said The Washington Post: “TARP.” Almost no one likes it, but the government’s corporate bailout program, which rescued banks, the auto industry, and insurers, averted financial catastrophe and paved the way for an economic comeback.

“The U.S. economy is a fantastic engine of prosperity,” and Obama can take no credit for this recovery, said The Wall Street Journal. In fact, the recovery would be further along if Democrats would stop extending jobless benefits. “These extensions only increase the incentive to delay going back to work.” By playing the compassion card, “Democrats are ensuring that the jobless rate stays higher for longer.”

What the columnists said

“The jobless recovery appears to be over,” said Paul Davidson in USA Today. “But that doesn’t mean jobs will be easy pickings.” Despite predictions of robust economic growth for 2010, the jobless rate “is expected to fall only gradually,” as hundreds of thousands of long-unemployed workers resume hunting for jobs.

For the unemployed, the enemy is now “productivity,” said Neil Irwin in The Washington Post. During the recession, businesses produced 3 percent fewer goods and services, but they’ve done so with employees working 10 percent fewer hours, squeezing “dramatically higher output from every worker.” For now, at least, nervous employers will continue to try to meet rising demand through the existing workforce, or by relying on part-time hires. “If you’ve suddenly become more efficient, why change unless you have no choice?”

A full-scale recovery will force employers to start hiring again, said Larry Kudlow in National Review Online, and it’s on the way—despite Obama’s “taxes and regulations.” In fact, a separate household survey conducted by the Labor Department suggests the number of jobs created in the first quarter was actually 1.1 million—371,000 jobs per month. “If that continues, the unemployment rate will be dropping significantly” in the months ahead. That puts Democrats in a race with the clock, said John Aloysius Farrell in USNews.com. The economy still determines election outcomes, and if companies are hiring again by November’s midterm elections, the Democratic losses may be smaller than the pundits now expect. Meanwhile, “the odds Obama will serve a second term are looking better every day.”