Low unemployment rate is not satisfactory enough

February's jobs report surprised everyone: amid the chaos of sequestration, U.S. employers still added 236,000 jobs and the unemployment rate dropped to 7.7 percent. It was the third time in four months that payroll growth exceeded 200,000 and the unemployment rate reached its lowest level in four years.  

Especially, all segments of the private sector added jobs, now averaging more than 203,000 additional jobs per month. The wide range of added jobs across industries signals economic recovery and growth. Moreover, Phil Izzo from the Wall Street Journal said the unemployment rate without government job cuts would be even lower, at 7.1 percent, since the government has cut 750,000 jobs since June 2009.

However, some experts still hesitate to consider the 7.7 percent as a progress. Fear and uncertainty still reside behind the good news.  

According to Ben Casselman from WSJ, a part of the drop in the unemployment rate was driven by the shrink of the labor force. More job seekers gave up on job searching and long-term unemployment rose in February. Meanwhile, gains in employment were caused by part-time workers.

Being positive is not the main question, but the question is whether this trend would be sustained. What just happened would probably be another short spurt and we might have to observe sluggishness in later months, again.

In addition, the Fed won’t stop its quantitative easing anytime soon, since the labor market hasn’t seen sustained employment growth. Jon Hilsenrath from WSJ wrote, “When Federal Reserve officials next meet later this month, they no doubt will welcome recent job-market improvements, but they also will want to see more.” The central bank expects several more positive job reports before raising short-term interest rates and discontinuing the injection of $85 billion per month into the market.

Lastly, the sequestration, meaning reducing the size of the public sector, would definitely cut jobs and push up the unemployment rate in the near future. Sequestration also lowers the output growth rate: stagnant output growth hardly supports jobs growth.


So for now, we may not contemplate the job market’s success in February for long. We need to head right back to work against the sequestration and do the difficult job of sustaining the low unemployment number.

By Clara Tran