February jobs report: Stronger than expected

(MoneyWatch) The Labor Department said 236,000 jobs were created in February and the unemployment rate edged lower to 7.7 percent from 7.9 percent. This level of job growth is welcome, but many are taking a wait and see approach to the job situation until the effects of sequestration are fully known.

The February employment report is the last one before the government's across the board spending cuts go into effect. Economists are waiting to see whether the Congressional Budget Office's projection of 750,000 fewer jobs comes to fruition or whether the U.S. economy is strong enough to weather the cuts and continue to create enough private sector jobs to compensate for the government jobs that could vanish.

Capital Economics framed the bullish case on the economy, noting, "Despite the continued drag from fiscal austerity, the outlook for the economy is improving." The improvement can be seen in a few ways: Business investment is accelerating, due to robust earnings growth; housing will no longer be a headwind for the economy and instead will contribute to growth; manufacturing has started to pick up after a break; and consumers appear to be absorbing the expiration of the payroll tax cut, without too large a hit to confidence or spending. Taken together, the analysis projects a slowdown in growth to about 1 percent for the first half of the year, followed by a second-half annualized rate of 2.5 percent.

While the analysis acknowledges big risks to the economy (U.S. government shutdown or another chapter in the eurozone crisis), the general gist is that the economy is doing just fine and as a result, job creation should continue, despite the Washington antics.

Arguing the bearish case on the economy is the Economic Cycle Research Institute (ECRI), which declared that the U.S. economy was "tipping into a recession" in September 2011. Eighteen months later, ECRI is sticking to the call and noting that despite improvement in the housing and stock markets, the economy is stuck at "stall speed" and the research group is "not seeing signs of an imminent growth upturn that so many claim to see."

Admittedly, ECRI is in the minority on the recession call for the economy, but there are plenty of skeptics who believe that as the effects of sequestration are more fully felt in the next 30 to 60 days, the U.S. economy will slow down, job creation will suffer and for those lucky enough to have jobs, incomes will remain stuck.

Regardless of how well the average worker's 401(k) is doing, income is still the largest contributor to overall financial health and confidence. Sentier Research recently updated its report on wages and income and the results are sobering. The average U.S. household is doing worse today than it was at the end of the recession.

The median annual household income in January 2013 of $51,584 was 4.5 percent lower than the median of $54,008 in June 2009, which is when the recovery began. As if that were not enough, household income now is 6.2 percent lower than it was on the eve of the recession (December 2007), and is 7.3 percent lower than the median of $55,659 in January 2000.

Academic analysis aside, these figures are what Americans are struggling to overcome. Until household income and wage growth accelerates, most U.S. workers don't really care whether economists call this a recession or a slow-growth recovery; they just want to make more money.

February jobs report

-- Jobs created: +236K (Revisions from Jan and Dec: -15K)

-- Private jobs created: +246K

-- Government jobs lost: -10K

-- Unemployment rate: 7.7 percent (from 7.9 percent)

-- Broad unemployment rate: 14.3 percent (includes the official rate plus "marginally attached workers," those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that's all they could find)

-- Total unemployed: 12 million (down from 12.2)

-- Long-term unemployed: 4.8 million, 40.2 percent of the total unemployed

-- Participation rate: 63.5 (below the 66 to 67 percent rate that was normal over the last 20 years; 2/3 of recent decline is due to demographics)

-- Average work week: 34.5

-- Hourly earnings: $23.82 (over last 12 months, up 2.1 percent)

-- Professional and Business services: +73K

-- Health services: +32K

-- Construction: +48K

-- Retail: +24K

Editor's note: CBS MoneyWatch initially published an Associated Press story on the unemployment report, which we have since replaced with this staff-written article. You can find the initial AP report and reader comments here.