NEW YORK ( TheStreet) -- The much ballyhooed February nonfarm payroll report and unemployment figures were released yesterday. Based on the bond- and stock-market reactions to the news (albeit oil-price movements are also clearly impacting current market movements), investors are skeptical, at best, that unemployment is falling quickly enough to sustain a solid U.S. economic recovery.
Well, that comment may not be fully capturing investors' disappointment with the report. What has really disheartened investors is the fact that wage growth (hourly earnings) remains unchanged. Meanwhile, food and energy (grocery and gasoline) prices are rapidly escalating. Translation: Consumers' real purchasing power is diminishing. And if consumers must spend more money at Safeway and the Arco station (assuming they've forgiven BP), there's that much less of "consumption" that feeds into the economy. And, oh, by the way, that consumption is roughly 70% of what drives our economy (sorry, pun intended).
Whereas the bulls and the politicians will point to the steady, albeit moderate, degree of job improvement, there just simply aren't enough jobs being created quickly enough with any wage increases to meaningfully heal the U.S. economy. Let's hope that changes quickly.
Meanwhile, we do have to tip our hat to the bears, who rightfully point out that the official government statistic of an 8.9% unemployment rate (meaningfully down from 9.8% only three months ago) may not be fully capturing the whole labor picture. Why not? Well, let's attribute that to something called the labor force participation rate.You see, the government defines unemployment as those non-military individuals over age 15 who don't have a job, have actively looked for work in the past four weeks, and are currently available for work. The government definition also includes people who were temporarily laid off and are waiting to be called back to that job. But what the government's definition fails to capture is how many Americans (over age 15 and not in the military) have spent countless unsuccessful months looking for work and have finally left the labor force. Specifically, those persons who didn't look for a job in the past four weeks, or those who are so discouraged that they have stopped looking for a job, are not counted as being unemployed. Ironic, isn't it? The longer someone is not working, the less likely they are to be considered unemployed by the government. Go figure.