Economists are looking for a breakthrough employment report that will send the stock market soaring and buoy Democrats as they come off a big win on health care.The Labor Department plans to release the March employment report Friday. In February, the economy shed 36,000 jobs, and the unemployment rate held steady at 9.7%, but economists believe Northeast blizzards held back job creation. For March, the consensus of forecasters is for a 200,000 increase in payrolls, though estimates range from a loss of 40,000 jobs to a gain of more than 300,000. My forecast is for an increase of 150,000. Let's hope the optimists have it right, and the economy can dodge a double-dip recession. There's still a one-in-five chance of a double dip and a one-in-two chance of one quarter of negative GDP growth after the inventory rebuild is complete. One negative quarter should not be a worry. Takeoffs are hardly ever seamless or smooth; there were two negative quarters during the 2001 acceleration. Consumer spending is up, and a bit more is being made in the USA. People aren't buying homes, but they are buying other durable goods again: furniture, building materials (putting up that garden shed), sporting goods, and electronic products and appliances. I like home theaters and new kitchens as leading indicators. March car sales are strong -- up in the range of 12 million units at an annual pace. Part of that is a rebound from January and February sales, which were dampened by snow. With gas prices rising, analysts won't know until late spring whether the auto sales recovery is sticking, but for now there are green shoots -- at long last -- in the auto patch. The Institute for Supply Chain Management tracking index has manufacturing up the last seven months, with firms hiring in the last three months. At last, it is happening! The economy needs to create about 140,000 jobs each month to keep pace with labor force growth, and it is a long way from getting back the 8.4 million jobs lost during the Great Recession.
If Americans can manage down their trade deficit with China and cut gasoline consumption, gradually, the economy can get back those lost jobs. It's time for President Obama to turn to those tasks. The domestic situation is stabilized, and the health care debate is done. Now, the president needs to challenge China about its undervalued yuan and protectionist trade policies and encourage Detroit to build more fuel efficient cars and develop more domestic oil and gas. China is on the President's radar screen, but near-term energy solutions are not. It's high time to move both issues to the front burner.