The Department of Labor just reported that in February, employment fell by fewer-than-expected 36,000 jobs with the unemployment rate steady at 9.7%.

The initial stock market reaction was positive, with Dow Jones futures rising from about +20 to about +60 in the first few minutes after the news.

While we may hear the Obama Administration trying to spin this as some sort of economic victory for their failed stimulus or otherwise trying to put the best face on the economy whose neck they have their giant boot on, this is in truth not excellent news.

Census workers added about 15,000 jobs which was somewhat offset by a decline in postal workers.  However, census workers’ jobs are temporary while postal workers’ firings are permanent.  Keep an eye out for an even larger census effect next month.

There remain 2.5 million “marginally attached to the labor force", meaning people who “wanted and are available for work” but have not searched for a job in the last 4 weeks.  Of these, about half are simply discouraged and half are spending their time doing other things such as going back to school even though they’d rather be working.

It remains to be seen whether small business, the engine of growth in America, will be willing to hire workers given the unnecessarily uncertain regulatory and tax environment.  (I say unnecessarily because the Democrats don’t have to keep talking about tax hikes, cap-and-trade, and even health care “reform", all of which leave business wondering how much their costs are going to be increased.)

Keep in mind that job growth needs to be somewhere in the area of 125,000 jobs gained per month in order to keep up with population growth…without any reduction in unemployment.  In order to make up roughly 10 million jobs to get to an employment situation roughly where we were near the peak of the economy, you’d have to see job growth of over 600,000 per month for two years straight, or 350,000 per month for four years straight.  Any such scenario seems unlikely while we live under the tyranny of Obama-Pelosi-Reid.

Given the current utter stagnation in employment, in large part due to the Obama Administration’s policies, it’s very hard to see unemployment going below 8% anytime soon.  Indeed, it would not surprise me to see unemployment persistently high until Obama’s single term in office ends his political career or at least polling makes it certain that it will end.  Things will probably improve somewhat if the GOP takes back at least one house of Congress in November.  My guess is that unemployment will remain above 9% when we reach this November’s elections and that if it falls somewhat under that, it will be offset by a large increase in discouraged workers who are not counted in that headline number because they’ve just given up.

[My friend Brian Wesbury is far more optimistic than I am…]