WASHINGTON — Federal Reserve Chairman Ben Bernanke calls them “green shoots” — the rising housing sales and factory orders and small market gains that signal an economy coming out of its downward spiral.
Friday’s new jobless figures trampled them.
Looking at the numbers, the economy seems to be moving in two directions. First some spring-like signs of hope, then the dismal jump in unemployment with 13.2 million out of work.
Even under the best of scenarios, the signs of recovery will be mixed, with employment among the last to improve. For President Barack Obama, that spells potential trouble with a so far tolerant, even hopeful, public.
“The job market has fallen off the cliff over the past five months and the massive hemorrhage in the job market will continue,” California State University economist Sung Sohn concluded grimly Friday.
Keith Hall, the commissioner of the Bureau of Labor Statistics, was no less bleak.
“There are very few bright spots in this month’s job report,” he told Congress’ Joint Economic Committee.
“Are there any anywhere?” he was asked.
“To be honest, no,” Hall replied. “In fact, the decline has been remarkably consistent.”
Unemployment rates are notoriously poor indicators of economic cycles. Joblessness tends to peak long after a recession has officially begun and it tends to dip long after a recession ends. Markets need to stabilize and improve, orders for goods need to increase and employers need to gain confidence before hiring begins.
The 16-month recession of the 1980s ended in November 1982, but unemployment remained above 10 percent for seven more months. Similarly, unemployment after the 1990-91 recession continued to rise to a peak in July 1992.
This time, Sohn predicts unemployment will exceed 10 percent well into 2010.
By then, the economy could be in recovery, but millions of Americans would still be in pain.
Already economists were seeing glimmers of a turnaround in increased home sales. The stock market has been bullish for more than two weeks. Automakers cheered March car sales, which though bleak compared with a year ago, improved over February.
Tax cuts included in the $787 billion economic stimulus bill will soon show up in workers’ paychecks. And the billions of spending in the bill will begin flowing into the economy as well.
“The problem is not that there aren’t positive signs,” said Ken Goldstein, a labor economist at the Conference Board, a New York economic research group. It’s just that the unemployment data “underscores how deep the hole is.”
Unemployment is the public’s main measure of the economy. Those Americans who do not experience it first hand know a neighbor or family member who has.
More Americans know the unemployment rate than know the level of the Dow Jones industrial average. And among those who don’t know, most think the rate is actually higher, according to a new poll by The Pew Research Center.
So far, the public has shown great forbearance — indeed, optimism — concerning Obama’s economic policies. And while the administration has been highlighting some of the positive signs in the economy, it also has been calling for patience.
“What they’re doing is making it clear to the American people that there are no quick fixes,” said Democratic strategist Chris Kofinis. “That kind of brutal honesty buys you time.”
Obama’s team has been trying to strike a fine balance, giving the public and the markets confidence without inflating expectations about the speed of the recovery.
As Lawrence Summers, Obama’s top economic adviser, said in a recent interview: “If you ask people questions about whether they have confidence in the economic leadership of the country, confidence in the president, these things are starting to move in a more favorable direction. It’ll be a long time till we repair the damage.”