OPTIMISTS SHOULD CELEBRATE THE ECONOMIC RECOVERY
November 7, 2010: This morning came news that job growth actually began to pick up nicely three months ago.
This means that the economy has been creating private jobs at an above-trend rate for three months now, but the total has been held back by government; besides shrinking census employment, local government payrolls shrank in October.
I think the most plausible explanation is that private-sector employment had begun a decent recovery earlier this year, then lost steam because of the European debt crisis, the BP oil spill, and the fading contribution of fiscal stimulus. Those restraints have begun to lift. Data on factory orders, retail sales and car sales suggest a modest rebound began in the last few months. Indeed, retail employment rose 28,000 in October. The odds favour a continuation of decent job growth, though not as briskly as in October. And hazards remain. Bank credit continues to contract, although more slowly than earlier this year. Political gridlock could trigger a premature shift to fiscal tightening. But for now, optimists should celebrate.