The Unsettling Employment Report for March

The Labor Department just released the employment report for March and the results are not good. On the surface, there is the positive that the rate of unemployment went down from 8.3% to 8.2%, but again, this is just on the surface. The entire decline in the unemployment rate is the result of people leaving the workforce. In other words, there are more folks who have given up looking for work so they are no longer counted. The government survey used to determine the unemployment rate actually found that fewer people had jobs in March than in February.

The second survey in the report tells us the number of jobs created during March. This survey came in at 120,000 jobs created. The expectation had been that employers in March created over 200,000 jobs and the number of Jobs created in February was 233,000, so the actual results again are not good.

The big concern is whether or not the rising gasoline prices have started to slow the growth of the economy. Over the last forty years, whenever energy prices have gone up rapidly, the economy has slowed. During March, the price at the pump for a gallon of gasoline rose by over 30 cents or just about 10%. This rise has shown no sign of slowing in the beginning of April so far. If the impact of the higher gas prices hits consumer spending as well as reduces hiring plans, it could push the economy back to the paltry pace of last Fall.

The stock market is closed today in observance of Good Friday. If nothing else happens, Monday is not likely to be pretty on Wall Street.