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Economic expectations too high?
Photo
Job seekers stand in line during the Career Expo job fair Wednesday in Portland, Ore. The Labor Department said Thursday that weekly applications increased by 8,000 to a seasonally adjusted 362,000, the highest level since January.
Associated Press
WASHINGTON
The U.S. economy has been outrunning everyone’s expectations.
Factory output surprisingly has surged. Housing, left for dead, is inching back. Most crucially, companies are hiring faster than many envisioned.
Funny thing about expectations, though: Each time you exceed them, it gets harder to do so next time. Today, economists expect the government to report a 200,000-plus job gain for a third-straight month.
The previous two months, job growth topped expectations, and unemployment sank from 8.7 percent to 8.3 percent. Consumer confidence has since risen. So have President Barack Obama’s approval ratings.
This time? Another strong jobs report would be a welcome sign that the economy is further strengthening. But unless it exceeds expectations, it may not ignite a celebration.
“There’s a new threshold for what’s seen as a good report,” said Nariman Behravesh, chief economist at IHS Global Insight. “Our expectations are higher.”
That’s why the Obama administration hopes to dispel any assumption that the job market is destined to keep improving at the same pace before the November election.
An Associated Press survey of nearly two dozen economists late last month found that many envision lower unemployment in the coming months than they did a few weeks earlier. A big reason is that they now expect stronger job creation.
Here’s how today’s jobs numbers for February could intersect with expectations:
INVESTORS
The stock market is likely to be the hardest to please. Investors expect steady economic growth and an improving job market, economists say. A result that merely confirms the trend isn’t likely to juice the markets.
“Strong numbers aren’t going to elicit the same kind of reaction as they would have last year when it looked like the economy wasn’t growing at all,” said Brian Gendreau, market strategist at Cetera Financial Group.
Gendreau says it usually takes a big surprise in the jobs report — positive or negative — for the stock market to react significantly.
POLITICS
The public’s perception of the economy has improved in recent months. And Obama has benefited. But analysts warn that voters remain cautious.
Matt McDonald, a partner at Hamilton Strategies, a consulting firm, said the White House has prematurely celebrated positive economic news before.
More such missteps could erode the administration’s credibility on the economy, said McDonald, who worked in the White House under President George W. Bush.
CONSUMERS
Healthier-than-expected job growth has brightened consumers’ view of the economy. A gauge of consumer confidence surged in February to its highest point in a year. A more- confident consumer is more likely to keep spending and driving further economic growth.
Still, Andrew Kohut, president of the Pew Research Center, cautions that consumers still are wary about the economy.