Unemployment Data for February Are Better

This morning the unemployment rate for February was announced by the Department of Labor.  The data show that the U.S. economy added 192,000 jobs in February and that the overall unemployment rate dropped below 9.0% for the first time in almost two years.  Consensus forecasts had the economy adding 196,000 jobs.

Analysis: This result is clearly a very big positive for the U.S. economy.  I especially like that economist estimates of jobs growth are finally starting to closely track reality.  This is a very strong sign of a stabilizing, if not stabilized, U.S. economy; an economy that is becoming more predictable.

I am happy to see that the unemployment rate has dropped below 9.0%.  But as I have discussed about the unemployment rate multiple times before, the rate can drop simply because people stop looking for work and therefore they drop out of the pool of job seekers.  Once news explodes into the community of the long-term, chronically unemployed, they will re-enter into the job hunting fray adding upward pressure on the unemployment rate.  So I am expecting that the unemployment rate will stop dropping with so much force in the next several months.

Additional good news is that both December and January’s job gains were revised upward.  I have also said numerous times that errors in statistical assessment that result in upward revisions are a strong sign of the underlying trend…UP!

Importance grade: 10; the unemployment rate of the U.S. labor force remains the world’s number one economic statistic.

Jason