NEITHER fiscal cliff, nor sequester, nor any other Washington chicanery can derail an American recovery that looks like maybe hitting its stride. Not yet, at least. Despite fears that a first quarter full of uncertainty over fiscal showdowns, expiring tax cuts, and automatic spending increases would present serious headwinds to the American economy, private firms seem willing to keep hiring, and at an impressive pace by the standards of this expansion. According to new data from the Bureau of Labour Statistics, the economy added 236,000 jobs in February, and the unemployment rate dropped to 7.7%. Firms have added more workers in only a handful of months since the recession ended in June of 2009.

There is no questioning the strength of the report. Private firms actually added 246,000 workers, offset by a small decline in government payrolls. Hiring was broad-based. Construction employment rose by 48,000, helped along by a housing sector that is finally beginning to pull its weight. Yet manufacturing and service employment were also up. So was hiring in retail, which might have been expected to contract given the January expiration of the government's stimulative payroll-tax cut. Both hours worked and wages notched meaningful increases, hinting at the robustness of labour demand. In the household portion of the report, employment also showed an increase, helping to nudge the unemployment rate down to 7.7%. Overall employment has risen by about 2m in the past year and is up almost 6m from the trough reached in early 2010.

Yet there are inevitably dark linings to the silver cloud. The biggest uncertainty concerns whether improvement will continue. The American economy has been here before, after all. Indeed, hiring early in 2012 was considerably stronger than it is now. Despite the relatively strong run of employment growth since November, year-on-year employment gains are well below the best performances of the recovery to date. For employment increases to continue, economic growth must pick up. In the past half year, GDP growth has been only mildly positive. And while the payroll tax increase seems not to have slowed consumers too much, there is time yet for the spending cuts in the sequester to do damage (and there are more budget battles ahead). When all is said and done, fiscal tightening in 2012 will prove substantial, making it hard for hiring to generate much momentum.

The Federal Reserve's continued push for more growth has been a welcome tailwind for labour markets, but there is always the risk that it will prematurely declare its work complete. For now, the Fed is promising to leave its target interest rate at zero at least until the unemployment rate is down to 6.5%, so long as medium-term inflation expectations aren't too far above 2%. But more hawkish members of the Fed may grow antsy as they watch unemployment drop and wages rise. Inflation worriers could push the Fed to conclude its ongoing, "open-ended" asset purchases earlier than markets previously expected. Any sign that the Fed was becoming more worried about inflation relative to unemployment would cast a shadow on a recovery that has yet to show the robust growth normally expected to follow a recession.

The Fed's concerns will only be stoked by the numbers on long-run unemployment. The ranks of those unemployed for less than six months continue to drop, while the numbers of those unemployed for longer are proving harder to reduce. And while the share of long-term unemployed in total unemployment continues to fall (it is now about 39%, down from close to 50% in early 2010), the worry is that much of that decline is occuring as workers leave the labour force altogether—as some 296,000 people did in February. These workers will prove very difficult to reemploy, and may represent a permanent loss to the economy in the absence of aggressive labour-market retraining and reform. The Fed may worry, as a result, that there is less room for the economy to grow and for joblessness to decline—and for it to continue supporting recovery.