Economist and Nobel Laureate Paul Krugman says the recent jobs data is encouraging — but that it is not cause to stop major efforts to spur job growth.

“For once falling unemployment was the real thing, reflecting growing availability of jobs rather than workers dropping out of the labor force, and hence out of the unemployment measure,” Krugman writes in his New York Times column. “Furthermore, it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out.”

But, Krugman adds, the economy “remains deeply depressed”, and long-term unemployment is still as high as it has been since the Great Depression. “So this encouraging employment report shouldn’t lead to any slackening in efforts to promote recovery,” he says. “Full employment is still a distant dream — and that’s unacceptable. Policy makers should be doing everything they can to get us back to full employment as soon as possible.”

Unfortunately, Krugman says, many policymakers have an “urge to purge” — “a sense that there’s something wrong with cheap money and easy credit even in a desperately weak economy.” He thinks that curtailing growth-spurring policies and raising interest rates would be a big mistake. “So here’s what needs to be said about the latest numbers: yes, we’re doing a bit better, but no, things are not O.K. — not remotely O.K.,” he says. “This is still a terrible economy, and policy makers should be doing much more than they are to make it better.”