March jobs report: What would Ben Bernanke say?

April 6, 2012, 8:04 PM UTC

FORTUNE – As Federal Reserve Chairman Ben Bernanke reviews Friday’s disappointing jobs report, he might just say “I told you so.”

For the past few months, data from the Labor Department suggested the growth of jobs was firming up. But Bernanke never really seemed to buy into the good news. And while transcripts of the Fed’s March meeting released earlier this week hinted that the basis for a fourth round of asset purchases was fading as the economy improves, it doesn’t necessarily mean the central bank will be shelving plans for QE3.

Bernanke has remained cautious – as he should be. In the coming months, it will be interesting to watch what the Fed will do.

In March, the economy added a mere 120,000 jobs, marking the first time since November that job growth fell below 200,000. The unemployment rate edged lower a tenth of a percentage point to 8.2%, partly because fewer Americans sought work.

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Forecasters are probably dismayed, but the latest data shouldn’t really be that surprising. A host of signs have suggested persistent unemployment for years to come.

For one, the positive jobs data in recent months had been defying economic theory. Under what’s called Okun’s Law, Wall Street economists had been wondering why the labor market seemed to be doing better than what the pace of economic growth would suggest.

What’s more, Bernanke has warned of a bleak jobs picture years from now, pointing to problems with long-term unemployment. He has good reason to worry. Going back to March’s jobs report: The unemployment rate might have ticked lower, but Americans who’ve been jobless for 27 weeks or longer was essentially unchanged at 5.3 million from the previous month. These individuals account for a large segment, 42.5%, of the unemployed.

For a peek at next month’s jobs report, it’s likely job growth would be equally, if not more, disappointing. Just take a look at temporary employment, a precursor to job growth since employers typically take on more workers and look to hire them full-time once the economy improves. In March, temp employment was unchanged over the previous month after increasing by 55,000 in February.

Not to imply that Bernanke is smirking at all his naysayers today. But the latest jobs data is just more evidence proving he’s not exactly unreasonably bearish about the future of our economy.