Hiring slowed to 88,000 jobs in March
Businesses dramatically curtailed hiring in March, according to new government data, raising questions about the underlying strength of the economic recovery as the nation absorbs deep federal spending cuts.
The economy added a paltry 88,000 jobs last month, less than half the number expected. The healing housing market, resilient consumers and record highs on Wall Street had fueled hope that the recovery was finally taking off. That momentum was seen as essential to helping the economy overcome the drag of automatic government spending cuts known as the sequester over the next few months.
The numbers released yesterday by the Labor Department clouded such optimism. Anemic job growth in March fell short of even lowball predictions, and economists were preparing for weaker results through the summer.
“We can’t break out,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “This is the old two or three steps forward, one step back.”
March was the month that the sequester took effect, though most spending reductions aren’t expected until later this spring.
The employment data showed that professional services, which includes many government contractors, added 51,000 jobs in March. The federal government shed only 2,000 jobs, not counting the U.S. Postal Service. That agency lost 12,000 jobs, according to the Labor Department, though the cuts were not related to the sequester.
The nonpartisan Congressional Budget Office has estimated that the sequester will cost the economy 750,000 jobs, though several private economists believe the loss will be significantly smaller.
In a statement, the White House warned of the impact of what it called Washington’s “self-inflicted wounds.”
“While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come,” said Alan Krueger, head of President Obama’s Council of Economic Advisers.
The sequester is the product of the gridlock in the nation’s capital over balancing the federal budget. Yesterday, Republicans blamed the president’s unwillingness to cut entitlement programs as the key roadblock to an agreement.
“At some point we need to solve our spending problem, and what the president has offered would leave us with a budget that never balances,” said House Speaker John Boehner, an Ohio Republican.