I can feel it coming. With a third weekly spike in jobless claims and the ADP National Employment Report below expectations (yes, economists actually forecast something that serves mainly as a predictor), tomorrow's jobs report for March is gearing up to be a make or break number. But only for the media and analysts.
What do I mean? Here's an example: On Good Friday, the Commerce Department reported strong increases in personal income (up 1.1 percent) and spending (up 0.7 percent) for February. After all the hype about the Jan. 1 payroll-tax increase, which restored the rate paid by the employee to 6.2 percent from 4.2 percent, how could this be?
In an effort to explain these surprising numbers, the Wall Street Journal cited a Bankrate.com survey showing that about half of U.S. consumers didn't notice the change in their paychecks. Shame on the White House for failing to reach more people with its dire forecasts!
Human beings have a need to understand things. That's fine, but an economy is a huge organism with a lot of moving parts. Any attempt to ascribe a single cause for the strength or weakness of a given data release, subject as they are to multiple revisions, is a fool's errand. It's the trend that matters.
On that score, there are a lot of indicators suggesting that the U.S. economy is improving. Housing, which sat out the first two years of the recovery, is contributing to growth again. That's likely to continue. The labor market is getting better as well. The U.S. government received twice as many petitions for H-1B visas (for skilled foreign workers) in the first week of the application season this year as it did in the entire first month in April 2012, according to the Wall Street Journal. That suggests foreigners perceive improved opportunities.
I don't know whether tomorrow's jobs report will show an increase of 250,000 or 150,000. What I do know is that we'll get a pat explanation for either outcome.
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