In March the national economy added 216,000 jobs which is welcome news. Consistent with this job growth unemployment fell slightly to 8.8 percent (from 8.9 percent). In addition, underemployment, which includes unemployed, discouraged workers, and people working part-time who want full-time work, fell slightly to 15.7 percent (from 15.9 percent). While this is a positive sign, there is a long way to go in order to get back to effective full employment (which is about a 5 percent unemployment rate). Center for Economic Research (CER) estimates that if the economy adds 200,000 jobs per month a 5 percent unemployment rate will be achieved in January 2018.
The unemployment rate in Wisconsin (for February) remained at 7.4 percent. In our 3 county region the unemployment rate is 8.2 percent. This is due to the 10.2 percent unemployment rate in Polk County. The unemployment rate in Pierce and St. Croix counties are at the state average. This past year Wisconsin added an average of 2,500 new jobs per month. CER estimates suggest at this level of job growth each month Wisconsin can achieve 5 percent unemployment by March 2015.
Examining employment in Wisconsin by sector the 4.1 percent growth in manufacturing employment stands out as a positive development. Also of interest is the 4.7 percent employment growth in other services. This sector includes repair and maintenance jobs. An intriguing hypothesis (not yet investigated) is whether growth in this sector is related to high unemployment in construction. It is plausible that unemployed workers in the constructions trades may finding self-employment opportunities in plumbing, electrical work, building repair, and remodeling which is reflected in the increased employment in other services. Future blogs will report on any evidence found regarding a connection between these sectors.
Increased spending is central to our economic recovery nationally and in Wisconsin. During the past 40 years we have relied, for the most part, on Federal Reserve monetary policy to stimulate spending during recessions. In the current recession, that option is not available as short term interest rates are at zero and banks hesitate to make loans. That leaves us with fiscal policy, which engenders more controversy. Some argue we need government to stimulate spending through public investment (i.e., infrastructure) and low taxes. Others argue that we need austerity primarily in the form of reduced government expenditures. Austerity, then, will reduce budget deficits (and debt) which will stimulate spending in the economy by promoting confidence that government will meet its obligations and not interfere in the economy.
It appears our policies at the federal level and in Wisconsin are moving towards austerity. We will be watching closely (and reporting on) the effects of these policies on our recovery in future blogs.