The drop in the unemployment rate to 9.7 percent in January from 10 percent in December isn’t as good as it looks, says Bank of America’s chief economist Ethan Harris.
“It’s a somewhat disappointing report,” he says.
Indeed, payrolls dipped 20,000 last month.
“The fact that we’re still losing jobs; if you look at the job gains, they’re these temporary census workers and temporary health workers creating the job growth,” he told Bloomberg.
“If you look at full-time, real jobs, they’re still dropping at an 80,000 or so (monthly) pace. The drop of the unemployment rate is a bit of a fluke.”
So a sustained improvement in the jobs picture hasn’t yet begun, Harris says.
But he does see a silver lining.
“When we look back at those job losses during the recession, which were absolutely off the charts, we need to remember … that companies overreacted to the recession,” Harris said.
“We had too many jobs cuts relative to the weakness in the economy. That gives hope that some of those people will be rehired in the year ahead.”
Not everyone sees the January report as a fluke.
"The wheels of the economy are turning,” Chris Rupkey, senior financial economist at Bank of Tokyo/Mitsubishi UFJ, told Reuters.
“The improvement in the employment data does match the increase in GDP the last two quarters, so it's not a fluke. The economic recovery looks much more sustainable today."
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