Employment growth accelerates along several dimensions: nonfarm payroll, an alternative measure of nonfarm payroll, private employment, hours, and civilian employment (report here). However, JEC vice chairman Brady (JEC-Republicans) states in a press release: “Job Numbers Mask Underlying Job Weakness.”
Figure 1: Nonfarm payroll employment from January release (blue), and from December release (dark red), and civilian employment adjusted to conform to NFP concept (green), 000’s, seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS via FRED, BLS, and NBER.
Not only did NFP employment increase by 243,000, benchmark revisions going back four years (although important revisions were for the last year) raised the December 2011 estimated employment by 266,000. Trend employment continued to rise. This upward shift was also reflected in the research series that is calculated by using household data to generate a series conforming to the NFP concept; the changes are largely due to the application of new population controls (see BLS, Appendix). More on the distinction between the official and research series at here.
With the government shedding jobs, it is perhaps more useful to refer to private employment for underlying labor market trends.
Figure 2: Log private employment (dark blue), and log aggregate weekly hours index in private sector, series AWHI (red), seasonally adjusted, rescaled to 2007M12=0. NBER defined recession dates shaded gray. Source: BLS via FRED, NBER and author’s calculations.
Aggregate weekly hours continue to grow more rapidly than employment; by January, aggregate hours had regained ground such that both employment and hours are now about 4.5% below peak (2007M12) levels.
While private employment continues to grow, government employment continues to fall; the decline is most pronounced at the state and local level (Wisconsin is a good example of the contractionary impact of such measures  ). However, civilian Federal government employment is also declining.
Figure 3: Twelve month change in government local employment (blue), in state employment (red), and government employment ex.-temporary Census workers (geen), 000’s, seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS via FRED, NBER and author’s calculations.
Finally, it’s useful to examine the trends in multiple labor market series as once. Figure 4 presents one view.
Figure 4: Three month annualized growth rates in nonfarm payroll employment (blue), in civilian employment (red), private sector employment (purple), private sector hours (green), and civilian employment adjusted to conform to NFP concept (orange), all calculated as 3 month log differences, seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS via FRED, BLS, NBER and author’s calculations.
So, for now the trend is positive, but there are clouds on the horizon [Madigan/WSJ RTE]. For more coverage, see [Rampell/Economix] Norris/Economix] [Lahart/WSJ RTE] [Evans/WSJ RTE] [Free Exchange] [Tim Duy] [CR]. A roundup of economist views available from [Izzo/WSJ RTE].
Despite improvement in the labor market, it is clear more needs to be done to accelerate closing the output gap. JEC vice chairman Brady (R) argues:
…It’s time to change course away from higher deficits and higher taxes that are creating fewer jobs and lower expectations for America. Instead, we need to restore confidence by businesses on Main Street to make the new investments in buildings, equipment, and software to create millions of jobs.
Brady and House Republicans continue to push for a balanced budget, fairer tax code, more balanced regulation and reforms to make Social Security and Medicare solvent for the long term.
This perspective shares intellectual lineage with the underpinnings of the Ryan plan, examined here the JEC expansionary contractionary fiscal scenario here. An examination of the other propositions of equal empirical deficiency — regulation reduction and growth, and regulatory uncertainty reduction and growth — examined here and here, respectively.
In my opinion, Representative Brady’s prescriptions will, like the contractionary fiscal policies implemented in Wisconsin  , reverse rather enhance the employment recovery seen thus far  (i.e., textbook macro applies).