Signs of an Economic Spring
THE news that employers in the United States added 365,000 people to their payrolls in February is another welcome sign that the recovery is taking firmer hold.
Last month's employment data, released Friday, were the best in four years: The overall unemployment rate fell to 7 percent from 7.1 percent in January; the 365,000 workers added to payrolls comes on top of a 106,000 increase in January.
Many economists have been impressed by the breadth of the February jobs increase: Construction added 96,000 jobs, for example, retailing added 131,000, and services 131,000.
Factory overtime hit the highest level in at least two decades, with workers averaging 4.2 hours of overtime a week. And part-time employment rose by 348,000 jobs. Both of these signal that manufacturing employment may be due for a burst; employers generally tend to rely on part-timers and overtime to cope with increasing demand until they are convinced that the recovery is solid.
Not surprisingly, some lawmakers in Washington jumped on the employment numbers as evidence that the economy does not need President Clinton's $31 billion stimulus package or the $5.6 billion extension of unemployment benefits Congress passed last week.
Those judgments are premature. First, the economy still lags its typical job-creation levels for this stage of a recovery. Second, while unemployment fell markedly among people out of work for 26 weeks or less, unemployment for those out six months or longer fell only slightly. There remains a significant problem with long-term unemployment. Finally, Washington is under pressure to cut the budget further than Mr. Clinton proposed. This effort is vital to the nation's economic well-being; but reductions i n spending act as a drag on the economy, as do tax increases. A modest boost in the near term could help put the economy on a strong enough footing to weather the impact of proposed spending cuts and tax increases.