It’s hard to get too excited about the February jobs report, given the likely impact of the coronavirus this month and beyond. But for now, we can affirm that, before the virus hit, the U.S. economy was firing on all cylinders.
Total nonfarm payroll jobs increased by 273,000 last month, smashing expectations of 175,000, and the headline unemployment rate dropped to 3.5 percent. In addition, job growth in December and January was revised upward by a combined 85,000. While the employment-to-population (EPOP) ratio and the EPOP ratio among prime-age workers both ticked down slightly in February, the labor-force-participation rate (LFPR) and the LFPR among prime-age men both held steady. Also, year-over-year growth in average hourly earnings came in at 3 percent. (For that matter, economist Nick Bunker of the Indeed Hiring Lab points out that wage growth has recently been strongest among workers in low-wage industries.)
New York Times economics correspondent Neil Irwin called it a “blockbuster” report. “The combination of faster job growth, rising wages and steady hours means that aggregate incomes are rising more quickly,” observed his Times colleague Ben Casselman. “That’s key for consumer spending.”
Of course, the March jobs report may look very different, thanks to the coronavirus. Former Obama White House economic adviser Jason Furman now believes Congress should immediately pass a $350 billion fiscal-stimulus package to counter the risks posed by the virus.
Another former Obama economic adviser — Austan Goolsbee — thinks the virus might actually hurt America’s economy more than China’s. Why? “Because face-to-face service industries — the kind of businesses that go into a tailspin when fearful people withdraw from one another — tend to dominate economies in high-income countries more than they do in China,” Goolsbee writes. “If people stay home from school, stop traveling and don’t go to sporting events, the gym or the dentist, the economic consequence would be worse.”
Still, even if the virus does take a significant toll on the U.S. economy, “it would have to be a massive hit to even put a dent in the robust labor market,” notes Washington Post columnist Henry Olsen. “Normally, job growth slows at the end of an economic expansion. But that’s not the case 10 years after the recovery from the Great Recession began. Unemployment remained near 50-year lows, and wage growth continued to exceed inflation. These are good times for the American worker.”