March Jobs Report

March employment growth was the worst since June of 2012. 88,000 jobs were added, and the unemployment rate decreased to 7.6% due to people leaving the labor force. 

Naturally, the fact that the sequester hit in March comes to mind for a potential cause. While the amount of spending cut so far is bound to be tiny (due to lags in appropriations and spending only $41 billion of the $85 billion in cuts for 2013 will take effect in 2013), there is no longer any optimistic uncertainty that they will happen. 

On the other hand, bad reports have come and gone and sometimes been revised away, so it can't be said with certainty that the report really was this bad, or that it was caused by any one thing specifically. Numbers for January and February were revised up somewhat.



Additionally, due to the design of the Feds monetary stimulus, they automatically respond to bad report with more stimulus. This is because the Fed is buying bonds and other assets, by adding zeros to the accounts of banks they buy them from, at a rate of $85 billion a month until unemployment reaches 6.5%. When a bad report comes out it means their stimulus will last longer, and thus larger in size, which will factor into expectations. This is another benefit of the Fed's unprecedented policy, it automatically responds in a predictable manner to economic conditions.