With a "troubling" jobs report, is recession around the corner?

The Associated Press

It could be worse. But how much worse?

Featured Topic | Posted 36 weeks 4 days ago

With a "troubling" jobs report, is recession around the corner?

American employers cut 17,000 jobs last month -- the first such reduction in four years. President Bush called Friday's labor report "troubling," and it's tough to disagree. The loss of jobs is another indicator of a slowing economy. But policymakers and economists question whether the Bush stimulus is enough to avert a recession.

What should the government do, if anything, to spur the economy? Is America entering another recession, or something not quite as painful?

Ben likes: Recession? Not yet

Investor's Business Daily

Congress' Joint Economic Committee recently created an Employment Recession Probability Index that uses changes in jobless claims and the unemployment rate. It has predicted every recession since World War II. What's it show today? Believe it or not, the likelihood the U.S. was in recession in January was 6% -- down from 35.5% in December.

So, yes, we've hit a slow patch. But no, despite the bleatings of a media establishment eager for "change" in Washington, we're not in a recession yet.

Joel likes: The insignificance of zero

Paul Krugman/New York Times

So the new labor report is out, and it says that nonfarm payrolls actually fell last month. On the other hand, employment growth for December was revised up.

You shouldn’t take any of this seriously. A better guide is probably to average the last 2 or 3 months. What you get then is that employment is still growing, but v-e-r-y s-l-o-w-l-y. In particular, employment growth is well short of what’s necessary to keep up with population growth. So even though it’s premature to say that jobs are shrinking, as a practical matter this makes no difference: the truth is that the jobs picture looks moderately dire.