Could businesses be getting used to a dysfunctional Congress? Judging from the latest jobs report, it's not beyond the realm of possibility.
The Labor Department reported today that in the past three months through January, nonfarm employers added an average of 200,000 jobs a month. That's up from 154,000 in the three months through October, and enough to make significant, if gradual, progress in lowering the unemployment rate.
What's more, the latest data included revisions showing that nonfarm payrolls grew by 196,000 in December, a month in which businesses were supposedly bracing for a sharp drop off the fiscal cliff, the combination of tax increases and spending cuts that would have gone into effect Jan. 1 if President Barack Obama and Congress hadn’t reached a deal to delay the disaster.
Why, in the face of an economic Armageddon that has been only postponed, have employers kept hiring?
All the information we have suggests that businesses are truly worried about the government's fiscal problems and how they will be resolved. One measure of economic policy uncertainty -- an index created by economists Steven Davis of the Chicago Booth School of Business and Scott Ross Baker and Nick Bloom of Stanford University -- stood in December at its highest point since the summer of 2011, when the debt-ceiling battle brought the government to the brink of default. Executives of big companies such as Caterpillar Inc. have warned that the uncertainty could affect their sales and profits.
What managers do, though, tells us more than what they say. And they are hiring pretty consistently across various industries. So either job growth would have been a lot stronger in the absence of uncertainty, or the effects of Congress's recurrent cliffhangers are beginning to wane.
Complacency is a good thing only if it turns out to be justified. The U.S. is still very far from economic and fiscal health. Persistent unemployment is threatening to permanently damage the economy's potential to grow. Even lawmakers' most ambitious deficit-cutting plans would cover no more than a third of the gap between the federal government's income and obligations. A balance must be struck between short-term stimulus and longer-term prudence.
Hopefully, Congress won’t take a slowly improving job market as a sign that it can relax its efforts -- or, worse, take the economy off a cliff.
(Mark Whitehouse is a member of the Bloomberg View editorial board. Follow him on Twitter.)