Starting with the labor market, as I mentioned, there have been encouraging signs of improvement in recent months. The unemployment rate had hovered around 9 percent for much of last year but moved down in the fall and averaged 8–1/4 percent in the first three months of this year, about 1–3/4 percentage points lower than its peak during the recession.
And even though the latest employment report was somewhat disappointing, private sector payrolls expanded, on average, by about 210,000 per month in the first quarter, up from gains averaging around 150,000 per month during most of 2011. Other labor market indicators have shown similar improvement. This news is certainly welcome, yet it must be kept in perspective.