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National Restaurant Association - Economist's Notebook: Steady job growth propels recovery into self-sustaining phase

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Economist's Notebook: Steady job growth propels recovery into self-sustaining phase

In his latest commentary, the National Restaurant Association's chief economist Bruce Grindy analyzes the latest employment trends.  The private sector added nearly 1.1 million jobs in the last five months, the strongest five-month span of job growth in nearly six years.  In addition, the restaurant industry remains one of the brightest spots in the economy, adding at least 20,000 jobs for the seventh consecutive month. 

The national economy continued to gather momentum in February, according to the latest employment report from the Bureau of Labor Statistics (BLS).  The private sector added 233,000 jobs in February, the third consecutive month with growth in the quarter-million job range. 

Over the last five months, the private sector added nearly 1.1 million jobs, the strongest five-month span of job growth in nearly six years.  Indeed, the economic recovery appears to have reached a self-sustaining point, where employment and spending growth provide the stimulus for more employment and spending growth.

Within the private sector, job growth in the restaurant industry continues to impress.  Eating and drinking places added 40,800 jobs in February, their seventh consecutive month with gains of at least 20,000 jobs.  Since the employment recovery began in March 2010, eating and drinking places have added more than 530,000 jobs, with current industry staffing levels standing nearly 150,000 jobs above the pre-recession peak. 

The unemployment rate was unchanged at 8.3 percent in February, which despite being persistently high, is actually a positive sign.  The labor force participation rate, which measures the proportion of individuals either with a job or actively seeking a job, increased from 63.7 percent in January to 63.9 percent in February.  This is a good sign in a recovery, as it means more people are getting off the sideline and entering the labor force because they see that jobs are available.  And the fact that the jobless rate remained unchanged despite an increase in the labor force means the economy was able to absorb the new entrants with the additional employment opportunities. 

The biggest risk to the recovery right now is gas prices, which jumped $0.50 since the beginning of the year.  While the recovery will likely withstand a temporary run-up in prices, an exogenous shock that would significantly impact oil supply – such as a military conflict with Iran or a blockage of the Strait of Hormuz – has the potential to trigger a downturn in the economy as a result of sharply rising prices. 

Barring any significant exogenous shocks, the economy appears to be on a path of sustainable growth, which points toward stronger job creation in the months ahead. 

U.S. Private Sector Job Growth

Private Sector Job GrowthFeb2012.gifSource: Bureau of Labor Statistics; figures are seasonally-adjusted

For additional analysis of restaurant industry trends, log on to Restaurant TrendMapper at www.restaurant.org/trendmapper (subscription required).

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