Economists who were doing somersaults after Friday's February jobs report have it all wrong, says former Deputy Treasury Secretary Roger Altman, founder of Evercore Partners.
The report showed that unemployment slipped to an almost-seven-year low of 5.5 percent last month. And non-farm payrolls rose 295,000, representing the 12th straight month with a gain of at least 200,000. That's the longest such streak since 1995.
But, "I don't think 5.5 percent [unemployment] is the best measure of labor market conditions,"
Altman tells CNBC.
"I think the U-6 measure, which includes people who work part time, people who want to work full-time, people who have given up looking work but would like a job, that's still in the vicinity of 11 percent. If 5.5 percent were really capturing the conditions, you wouldn't see wage growth just barely ticking up."
Average hourly wages rose only 2 percent in the 12 months through February, about the same rate that has prevailed since the recession ended in June 2009. And the labor participation rate totaled only 62.8 percent last month, barely above the 37-year low 62.7 percent.
So the Federal Reserve "should take their time" in raising interest rates, Altman said. There's been a lot of discussion about whether the Fed will raise rates in June or September. But he doesn't see that as point of contention in the bigger picture.
"I don't think if we were all sitting [here] five years from now we'd look back and say it's between June and September."
Nobel laureate economist Paul Krugman counsels patience for the Fed too. Is the economy strong enough to warrant a rate hike? "I don't know, but neither does the Fed," he writes in The New York Times.
"The question, then, is what to do in the face of that uncertainty, with no inflation problem yet in sight." The Fed's favored measure of inflation registered only 0.2 percent in the 12 months through January.
"To me, as to a number of economists — perhaps most notably Lawrence Summers, the former Treasury secretary — the answer seems painfully obvious: don't yank away that punch bowl, don't pull that rate-hike trigger, until you see the whites of inflation's eyes."
The Fed has an inflation target of 2 percent. "If it turns out that the Fed has waited a bit too long, inflation might overshoot 2 percent for a while, but that wouldn't be a great tragedy," Krugman notes. "But if the Fed moves too soon, we might end up losing millions of jobs we could have had."
The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
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