Jobs report: Slow growth ahead

(MoneyWatch) Last week, the government confirmed that the U.S. economy eked out a growth rate of 0.1 percent in Q4 2012. The result brings total gross domestic product for the year to 2.2 percent, an improvement over 2011's rate of 1.8 percent, but a level of growth that could be described as slow when compared to the post-war average of 3 to 3.5 percent.

The drag on growth can be attributed to lots of factors, the most important of which is that when economies plunge into once-in-a-generation recessions, which are fueled by bursting assets and credit bubbles, it's takes a number of years of sub-par growth to dig out. 2013 is likely to be another year of sub-par growth, in part due to the effects of sequestration, which is expected to create a 0.5 percent drag on growth. Economists now believe that GDP will come in at about 2 percent this year, which is fine, OK but not stellar and certainly not strong enough to spur robust job creation.

Sequestration means that the four-year trend of shrinking government (federal and state) payrolls will continue. Here's the annual change in public payroll employment since 2009:

• 2009: -76,000
• 2010: -213,000
• 2011: -317,000
• 2012: -77,000

Of these totals, state and local governments were responsible for a large portion (-129,000 jobs in 2009, -262,000 in 2010, -239,000 in 2011, -32,000 in 2012):

Unfortunately, just as state and local government layoffs are tapering off, the sequester will force federal cuts. Economists expect that 155,000 jobs were created in February, close to the 157,000 jobs added in January; the unemployment rate should hold steady at 7.9 percent.

Markets:

Will this be the week that the Dow Jones Industrial Average will take out its all-time nominal close of 14,164? If so, the timing would be ironic. March 9 marks the four-year anniversary of this cycle's stock market low:

• DJIA: 6,547 (lowest point since 4/15/97)
• S&P 500: 676 (lowest point since 9/12/96)
• NASDAQ: 1,268 (lowest point since 10/9/02)

The ensuing four years have seen enormous progress for stock indexes, more than doubling in values.

-- DJIA: 14,089 up 0.6 percent on week, up 7.5 percent on year (75 points below all-time nominal close of 14,164)

-- S&P 500: 1,518, up 0.2 percent on week, up 6.5 percent on year

-- NASDAQ: 3,169, up 0.2 percent on week, up 5 percent on year

-- April Crude Oil: $90.68, down 2.6 percent on week

-- April Gold: $1,572.30, flat on week

-- AAA nat'l average price for gallon of regular gas: $3.76

THE WEEK AHEAD:

Mon 3/4:

Tues 3/5:

10:00 ISM February Non-Manufacturing PMI

Weds 3/6:

8:15 ADP February Jobs Survey

10:00 January Factory Orders

Thurs 3/7:

8:30 Weekly Claims

8:30 US Trade Deficit

8:30 Q4 Productivity (revised)

3:00 Consumer Credit

Fri 3/8:

8:30 February Employment Report (+155K, unemployment 7.8-7.9%)

10:00 February Wholesale Inventories