Job Numbers Are Good, but Some Perils Loom
The Wall Street Journal - 03/10/2013
Ultimately, that kind of acceleration in hiring is unlikely without a sustained increase in the pace of economic growth. Indeed, as achingly slow as jobs growth has been in recent years, hiring has actually outpaced the broader recovery. An economic rule of thumb holds that gross domestic product has to rise two points faster than its long-term trend to generate a one-percentage-point drop in the unemployment rate. If that relationship had held during the current recovery, unemployment would hardly have fallen at all.
“If you don’t grow, you don’t make jobs,” said William Dickens, a Northeastern University economist and senior fellow with the Brookings Institution. “There has been a very slow pace to the recovery overall.”
The economy has likely gained a bit of steam in the new year, but only in comparison to the near-zero growth that marked the end of 2012. Most economists figure output is growing at a rate of less than 2% to start 2013, and government budget cuts as a result of the “sequester” make a more significant acceleration unlikely.