February's unemployment level remaining unchanged from January at 4.2 percent demonstrates a continuing sign that the economic crystal ball is still cloudy, according to the Employment Policy Foundation's Chief Economist, Ron Bird. The job market continues to give mixed signals - some pointing toward recession and some not.
Although the economy has slowed down, it is still creating new jobs: data from the Bureau of Labor Statistics shows that there was a 135,000 increase in February in the number of workers in the U.S., rising to a total 132.2 million workers - another historical record. Each of the last 6 months has set a new all-time high for total non-agricultural wage payroll employment. Total payroll employment in February 2001 was 1.8 million higher than February 2000 and 24.2 million more than February 1992. The more comprehensive household survey data (which includes the agriculture sector and those who are self-employed) showed total employment at 135.8 million, down only slightly from January's historical record of 135.9 million.
One worrisome sign from today's report was the increase in the number of job losers - the total number (both temporary layoffs and permanent job cuts) among job seekers in February was 2.9 million, up from January's 2.7 million, and nearly 250,000 more than the job losers number for February 2000. The latest job losers total was similar to the February 1998 total and significantly less than the 3.5 million recorded for the job losers category in February 1996. Job losers is a category of reason for unemployment and includes persons who lost their job in the current month and in prior months.
Duration of unemployment remained steady at about 6 weeks (median), while the average (mean) duration of unemployment also remained steady at 12 weeks. That number is higher than the median because of the impact of a relatively small number of very long-term unemployed persons.
At 820,000, the number of unemployed persons who had voluntarily quit previous jobs was down slightly from January's 838,000, but still about 50,000 higher than the number of job quitters reported in February 2000. The new labor market entrants and re-entrants categories of unemployed persons also declined in February. "Taken together, these declines may suggest a sprouting concern about job availability among potential job seekers," Bird noted.
"The economy is clearly slowing and the labor market is reflecting that," Bird said. "Right now, the numbers look similar to the 1996 pattern when the economy paused but a recession was avoided by timely and effective policy action. Once again, the key to continuing on a path of economic health is timely action in terms of interest rate cuts, tax cuts or other policy initiatives. If no action is taken, the economy could certainly teeter into a recession, but there appears to be a window of opportunity for quick, decisive action to avoid economic hardship," he concluded.