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February was yet another stellar month for the U.S. economy. The unemployment rate dropped to 3.8 percent, the number of employed Americans once again reached an all-time high and wages continued to increase sharply.
Yet, House Speaker Nancy Pelosi issued a statement claiming that “February’s abysmal jobs numbers are a stark warning from an economy being hollowed out by the GOP’s devastating special interest agenda.” Her statement is a perfect example of what happens when a politician focuses on a single metric as the means to garner a political advantage. In reality, even though the labor market added fewer jobs than expected last month, the Bureau of Labor Statistics’ (BLS) report indicates that – for American workers – the economy is still roaring.
In February, the number of people working increased by 255,000 while the number of people unemployed declined by 300,000. Labor force participation, the number of people working or actively looking for work, was over 63 percent for the 3rd consecutive month. The last time that happened was July - Sept. of 2013.
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The unemployment rate decreased by an impressive 0.2 of a percentage point compared to January, just 0.1 higher than the 50-year low reached last year. February marked a full year during which the unemployment rate was at or below 4 percent every month. The last time that happened was February of 1969 - January of 1970.
With the demand for workers high, average hourly earnings increased by 3.4 percent, representing the biggest pay bump for any 12-month period since the end of the Great Recession and the 7th consecutive month that year-over-year wage gains were at or above 3 percent.
Regrettably, Speaker Pelosi glossed over the positive indicators in the BLS data to fixate on February’s anomalously small job-creation figures. Although the 20,000 new jobs the economy created last month fell short of expectations, there are several reasons to take that figure with a grain of salt.
For example, employment in the construction industry declined by 31,000 jobs in February following a robust increase of 53,000 jobs in January – due in part to record level snowfall in the Northern Midwest and the unusual polar vortex that hit the U.S. in late January and extended into early February. It literally froze many construction projects for weeks. This extreme weather also helps explain why job growth in the hotel and restaurants sector was flat in February after adding an impressive increase of 89,000 jobs in January.
At the time, one investment publication warned that the polar vortex could have “a meaningful economic impact” because “life-threatening temperatures should deter even the most serious shoppers and committed construction workers, to say nothing of people indifferent between eating leftovers and going out to restaurants.”
Despite the abnormally bad weather, the number of people working meaningfully increased. That may seem counter-intuitive as job creation was below expectations. Part of the explanation is the number of jobs created and the number of people employed are derived from two separate BLS surveys. Nonetheless, with economic growth increasing the demand for workers, the number of people working can increase even when the number of jobs does not.
For example, as business improves, part-time jobs often turn into full time reducing the need for employees to work two part-time jobs to get by. When an employee quits a part-time job to take advantage of a full-time position, it opens that part-time position up for someone else. The result wouldn’t be an increase in the number of jobs created for the month (there would still be two jobs), but it would increase the number of people employed from one to two.
The result should show up in the numbers as more people working full time and fewer people working multiple jobs. According to the BLS, in February, 322,000 more people were working full time and 209,000 fewer people were working multiple jobs. That indicates an improving, as opposed to “abysmal,” jobs market.
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Not surprisingly, the February data reflect a continuation of the same positive trends we’ve been seeing since shortly after President Trump took office and began implementing the pro-growth policy agenda that America so sorely needed – tax cuts, deregulation and a focus on domestic energy.
One thing is absolutely clear, the U.S. economy is still strong. President Trump’s policies have fundamentally improved economic conditions throughout the country, and despite Speaker Pelosi’s protestations to the contrary, nobody has benefitted more than the American worker.
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