WASHINGTON -- The stronger-than-expected gain of 236,000 jobs and a four-year-low unemployment rate of 7.7 percent suggested an accelerating economy Friday. The question is whether politicians will ram a stick into the spokes of growth.
The job gains in February, reported Friday, exceeded analysts' expectations, which were in the range of 160,000 to 180,000. Coupled with revisions to December and January employment numbers, they suggested a clearly improving labor market. They also highlighted the risk that Washington's wrangling over budget matters might thwart momentum in the economy."It certainly demonstrated the economy was gaining some momentum in February," said Scott Anderson, senior vice president and chief economist for Bank of the West in San Francisco. "This is certainly going to be a report that is cheered by markets and is certainly consistent with the decline in jobless claims that we've seen in recent weeks."The problem with Friday's report is that a single month does not make a trend.The surveys that the Bureau of Labor Statistics used to gauge employment and unemployment were conducted in the weeks before Washington failed to stave off the sequester -- $85 billion in federal spending cuts that affect many government agencies, including the Pentagon and defense contracts."On net, today's report shows stronger momentum in the economy, which will help cushion, but not entirely offset, the blow from the fiscal cuts," Michelle Meyer, a Bank of America Merrill Lynch economist, wrote in a research note. "We maintain our view that the economy will hit a soft patch in the spring."Unpaid furloughs of government workers and layoffs at companies that contract with the government are likely to be noticed in April. The government report for that month comes in early May."I don't think we're completely out of the woods yet. I don't think we've seen evidence of the sequestration in today's report," Anderson said. "It means the private sector economy was on a stronger trajectory going into the sequestration cuts. ... Certainly the economy was weathering the tax hikes at the beginning of the year better than expected."That's a reference to the end of a payroll tax holiday. The government is again taking more out of paychecks for retirement benefits.Economists thought that might reduce economic activity, resulting in a half-point shaved off annual growth.Economists also think that the budget sequester, if not reversed in coming weeks, will cut growth by anywhere from two-tenths of a percentage point to seven-tenths.Have more to add? News tip? Tell us
