UNTIL RECENTLY America's squabbling politicians have mostly resolved their fiscal differences by delaying them. That tactic came to a head at the end of last year, at which time a host of tax rises and spending cuts were scheduled to drop. Despite wide fears that such budget changes would derail a shaky recovery, Congress mostly opted to let the hits fall. Marginal income tax rates on top earners went up at the first of this year, and—more importantly—a reduction in the payroll tax rate adopted for stimulative purposes was allowed to expire. Other automatic cuts were delayed by a few months, but they too were allowed to take effect in March.

The world has since watched and waited, and puzzled a bit as January and February came and went without a collapse in economic activity. Employers continued to hire at an average pace of more than 200,000 jobs per month to start the year. Many asked: had the American economy healed enough to absorb a falling deficit without much pain, or had it simply run off a fiscal cliff but not yet looked down into the chasm below?

New figures from the Bureau of Labour Statistics suggest that the austerity may have begun to bite in March. Nonfarm payroll employment rose by just 88,000 jobs that month according to the first estimate: well below expectations and the worst performance since June of last year. If recent patterns hold, that figure will be revised up a bit. It is low enough, however, to warrant concern. Government employment subtracted 7,000 from the 95,000 private-sector job creation figure. In a possible sign of the impact of the payroll tax hike, retail employment tumbled by 24,000, and job gains in the sector in January and February were revised downward.

Signs of weakness pepper the jobs report. Though the unemployment rate ticked down to 7.6% that was due to a surge of workers exiting the labour force. Employment in the "household survey", from which the unemployment rate is drawn, also dropped, as did the labour-force participation rate and the employment-population ratio (both of which performed poorly through all of the past year despite decent payroll growth). There will be ample concern that worse is to come, given that March budget cuts will have scarcely registered in this report. No doubt fears will arise that for a fourth year running the economy will have begun the year strong only to drop into a summer swoon.

Yet there are also good reasons not to overreact to the report. The likelihood of coming revisions is one. Though other economic indicators point to a slight slowdown in economic growth in March, few suggest the recovery is coming to a screeching halt, and some are fairly bullish. Though the March slowdown in hiring was broad-based, there continue to be encouraging signs of an increase in construction employment associated with the rebound in residential housing. Hours worked and hourly earnings picked up.

Though one might expect signs of a slowdown in hiring to influence the budget discussion in Washington, it is unlikely that new fiscal stimulus will be forthcoming. The good news, however, is that the Federal Reserve's policy framework has evolved since the last time a summer swoon occurred. The Fed's open-ended asset-purchase plan and economic thresholds for rate increases mean that when bad news hits policy is automatically expected to stay accommodative for longer. Recent comments from Fed officials indicated that sustained, decent employment growth might lead QE3 to be scaled back by the end of the summer; this report has made that much less probable.

And to some extent, this report simply drags expectations back to where they were early in the year, when it was anticipated that fiscal policy would meaningfully slow growth in the first half of the year but allow for an improvement later on. If surprisingly good numbers led some to believe that the American economy could shake cuts off without any effect, then perhaps they were a bit overoptimistic. Hopefully just a bit.