By Spencer Feingold
Economist Austan Goolsbee called the disappointing jobs figures released Friday morning a “bit of a gut punch" and warned that they should not be glossed over.
The monthly hiring and unemployment numbers released by the U.S. Bureau of Labor Statistics reported only 20,000 new jobs in February 2019, far fewer than the expected 175,000.
“It was very very disappointing to get a number like that,” Goolsbee, who served as the Chairman of the Council of Economic Advisers under President Obama, told Cheddar. “If we get several numbers of this, two or three in a row, I think everybody will be talking about" a recession, he added.
Despite being the 101st straight month of increases, February gain of 20,000 was the weakest growth since September 2017. In comparison, 311,000 new jobs were added to the economy in January and job growth averaged 223,000 jobs per month in 2018.
The labor report also sent stock prices tumbling Friday morning. After paring its losses, the Dow Jones Industrial Average ended down 23 points to close the market’s worst week of 2019.
Goolsbee noted that the February jobs figure is especially concerning when viewed next to the recent slowdown in GDP growth, which is forecast to be just 1 percent in the current quarter, according to Goolsbee. "When you have slowing like that jobs numbers are going to get worse," he said.
He also downplayed the importance of the wage increases reflected in the report and dismissed the notion that full employment has been achieved in the economy, saying "you would expect to see stronger wage growth than we have seen if that were true."
Others, however, had a more optimistic take on the numbers.
“Please do not start freaking out about a recession. One month does not make a trend,” Heidi Shierholz, the former chief economist as the Department of Labor, tweeted in response to the jobs report. “Average job growth for the last three months was 186,000, a much better reflection of underlying trends.”
Director of the White House’s National Economic Council, Larry Kudlow, also advised people not to overreact.
“I wouldn’t pay any attention to it to be honest with you,” Kudlow told CNBC, saying the “fluky” numbers are due to the recent government shutdown and seasonal influences.
It is not wise to “tell everyone to ignore bad numbers,” Goolsbee said in response to Kudlow's comment.
“When you splice it on to how growth is slowing down in a bunch of other areas, it’s at least a yellow light," he added.
Goolsbee is currently a professor of economics at the University of Chicago Booth School of Business and sits on the Economic Advisory Panel to the Federal Reserve Bank of New York.