Lousy jobs report has good news for hourly workers
The U.S. economy sputtered in the first quarter, with the March jobs report dispelling any notions to the contrary. On Friday morning, the Labor Department reported the smallest addition to monthly payrolls since late 2013.
"It will be a below-trend reading even after revision. It fits with the broader picture of an economy growing at 3 percent but taking it on the chin in the first quarter of every year," Tim Hopper, chief economist at TIAA-CREF, told CBS MoneyWatch.
If one likens the U.S. economy to a race, it would conjure up the image of a runner stumbling out of the gate, then running fairly fast for the remainder of the contest, with the initial loss of footing leaving a subpar performance overall.
"We've had weak first-quarter GDP growth every year since 2010. The second, third and fourth quarters are a better tell," said Hopper, who describes the nation's economic engine as not firing on all cylinders, as weakness in varying sectors feed off each other.
But before writing off coming quarters, the otherwise bleak March jobs data has a small but crucial bright spot: Hourly pay climbed 0.3 percent from February and 2.1 percent from the year earlier. That offers "real evidence that we're making progress," Hopper said. "Nothing on the horizon is going to derail the trend at this point, the economy is moving, businesses are hiring because they have to, and consumers are in fact spending more."
But economic reports, good or bad, may not matter all that much for the millions of Americans who live paycheck to paycheck, deriving no benefit from investments that make up 37 percent of U.S. income overall. Incomes have risen disproportionately for those reaping dividends from the stock market or for owners of rental property, while those whose sole means come from hourly wages have been left behind.
"If you're an hourly worker and haven't participated in the other parts, your day is coming. It's now your turn," said Hopper. "Wage pressures are going to start building. McDonald's (MCD) and Walmart (WMT) are not going to raise wages unless they have to. If a company feels it needs to raise wages, whether to keep people or to find people, it doesn't really matter. Labor markets are getting tighter."
"The bottom line is the economy is at the point where wages are going to start growing from here on out. In spite of the fact we're going to get a very lousy first-quarter read, a report like this helps you look through that," said Hopper. "There's going to be a bounce back."