Jobs Report Consistent With A Broadly Underperforming Economy

The economy created only 113,000 jobs in January, up from 75,000 in December. Colder-than-normal weather was a factor, but that simply does not explain two consecutive months of poor performance. These sad results are consistent with a broadly underperforming economy.

Construction, manufacturing and hospitality registered gains, while retail trade, financial services and education and health services disappointed.

In 2013, GDP growth slipped to 1.9 percent, thanks to the $200 billion January tax increase and sequestration spending cuts, but this year should be somewhat better. President Obama is not likely to get from Congress the higher taxes he proposes, and job creation is likely to be in the range of 200,000 per month.

Economists expect the first quarter to be slow, as global currency and equity markets adjust to the Federal Reserve phasing down purchases of longer-term Treasury and mortgage-backed securities; however, the fundamentals under the U.S. and global expansion are firming, even if those are not exciting.

More