The Bad Jobs Report: Blame It on the Weather?

I hate to be giving the Trump administration excuses for a weak economy, but I do feel an obligation to call the data as I see it and not make it up for political convenience. And the excuse actually does not buy them much anyhow.

The seemingly simple point is that we might well have gotten a weaker than expected jobs report in February because of weather-related factors. It wasn’t that February weather was especially bad. We did get some snowstorms in late January and February, but that is what happens in winter. Since our data are all seasonally adjusted, the question would be if February’s weather (before the reference date – February 12th) was worse than an ordinary February. My guess is probably not.

But January’s weather was likely better than a normal January. This could help to explain the better-than- expected jobs numbers in January. As I noted in my jobs preview, the weather was better than normal in the Northeast and Midwest in the second half of December and first half of January. This means that businesses that might ordinarily be forced to close for a few days because of snow were able to stay open throughout the period.

That story might show up most clearly in construction. In a typical winter some construction sites will be shut for a few days because snow or severe cold make it difficult to work. This is especially likely with starts of new construction, where it is much easier to put off the groundbreaking for a few days rather than start in the middle of a snowstorm.

Construction employment increased by 48k in January after falling by 7k in December and then dropping again by 11k in February. Did builders just have the animal spirits going in January, but then lost their enthusiasm a month later?

One item supporting the weather story is the number of people reporting that they were unable to work because of the weather was unusually low in January. It was 237k this year, compared to 591k last January and 588k in January of 2024.

While weather may have an obvious effect on construction, it can affect employment throughout the economy. In a typical month over 5 million people get hired. If hiring is mostly on weekdays, that would be 250k a day.

If businesses are shut for a day or two in a substantial part of the country, it is easy to believe that tens of thousands of people who might otherwise be hired get their hiring put off due to the weather. If we didn’t have normal seasonal closing in January, then hiring and employment would look better that month than would ordinarily be the case.

Okay, that’s the story why the loss of 92k jobs in February was not as bad as it looked. (It’s 60k after we adjusted for striking workers in health care.) But as I said, it doesn’t change the picture much. Let’s take December to February together, so we remove the impact of an unusually mild January.

Average job growth over these three months was 6k. Many of us are debating how much job growth we need, in the absence of immigration, to keep pace with the growth of the labor force. Most estimates put the number in the range of 30-60k a month. No one thinks that 6k is sufficient to keep the unemployment rate from rising and the labor market from weakening.

And we did see some evidence of labor market weakening in the February report, most obviously in the slight uptick in the unemployment rate to 4.4%. We also saw increases in the unemployment rate for disadvantaged groups, notably Black workers and young workers between the ages of 20-24. And the share of unemployment due to workers who felt confident enough of their labor market prospects to quit a job without another job lined up fell from 13.8% to an unusually low 11.4%.

But it is important to try to keep these stocks and flows in context. We have a labor force of more than 170 million. Suppose the high-end 60k estimate of the number of jobs needed each month to absorb the growth in the labor market is right. If the economy created zero jobs over the next year, we would be 720k below number needed to handle the increase in the size of the labor market. If all these people are actively looking for work and counted as unemployed, that would increase the unemployment rate by just 0.4 percentage points over the course of a year.

To be clear, that is not the whole story of a weakening labor market. The most disadvantaged groups will be hit much harder, as we’ve already seen with the increase in the unemployment rate for Black workers and young people.

And a weaker labor market means more people will be stuck at bad jobs. The five million plus workers who would lose or leave their job in a typical month will face much worse job prospects. And wage growth would slow. So, this is not a happy picture, but we just be clear on what to expect in a situation where job growth is very slow.

But this discussion may all be moot. We are at war. Oil and gas prices have soared and who knows what other economic damage will result. But for now, we can say the picture did not look very good going into the war. It’s not likely to look better when we get the March data.

This first appeared on Dean Baker’s Beat the Press blog.

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