February’s job report looked so promising. Unemployment was down by .2% and 236,000 jobs were added to the economy. The economic outlook was great. Then the jobs report for March came out. What happened?

In a blog post I wrote last month I predicted that the promising economic outlook was premature and that March’s report probably wouldn’t look as optimistic. I predicted this mainly because a rise in discouraged workers contributed to the drop in the unemployment rate and because there would be a drop in consumer confidence once the sequester took effect. A rise in discouraged workers contributed to the decline in unemployment again for March.

500,000 discouraged workers left the labor market, yielding an unemployment rate of 7.6% (down from 7.7%). Only 88,000 jobs were added were added to the economy, and hours worked and earnings remained flat as well. This new unemployment rate is a four-year low, which would typically indicate that the economy was improving. However, we can see from this data that unemployment has fallen for all the wrong reasons.

USA Today reports on the disappointing jobs report, highlighting the decrease in retail jobs and slowdown in construction jobs. These two industries are key indicators of recovery. In spite of this, the housing market has been on the rise, which suggests that construction jobs will pick up again in the near future.

While the economy continues to grow sluggishly, maybe we can hope for a better jobs report for May. In the words of Doug Holtz-Eakin, “the March jobs report was awful: jobs weak, labor force down, hours flat, and earnings flat.”