Don't take the 235K jobs number at face value, Goldman's chief economist says

Hatzius: Close call between 3 hikes with balance sheet adjustment and 4 rate hikes

The 235,000 jobs added in February may be an impressive number, but don't take the better-than-expected report as is without considering the circumstances, Jan Hatzius said Friday.

"I don't think you should take this 235,000 at face value," Hatzius, chief economist at Goldman Sachs, told CNBC. "We've seen almost 100,000 jobs added in the construction sector in the last two months, and the warm winter, I think, had something to do with that."

He told "Squawk on the Street" that the boost in construction hiring could also affect later reports.

"We should expect some payback over the next month, or two months, or maybe three months," Hatzius said.

Still, the strong report all but solidifies the case for a March rate hike by the Federal Reserve, even raising the possibility of more increases in 2017.

"I think four hikes is definitely possible," Hatzius said, but noted that his firm's prediction remains at three hikes this year and a possible balance sheet adjustment in late 2017.

"I think the Fed's showing that going every three months is something that they are, in principle, comfortable with," Hatzius said. "Of course, it always depends on how the numbers come in and what happens to financial conditions."

The economist added that easing financial conditions since the Fed's meeting in December are an important trend for investors to keep in mind.

"If you get a sharp tightening, we might regret this change. But our best guess is that won't happen," Hatzius said.

Economist: Wage growth signals good things for economic recovery

But various indicators within the report are all telling a story of improving economic conditions, leading labor economist Ed Lazear told CNBC's "Squawk Alley" on Friday.

Lazear, who chaired the Council of Economic Advisors under President George W. Bush, said that upticks in labor participation and wage growth and a decline in workers taking up part-time jobs for involuntary reasons show that the economy is steadily recovering.

"I like the employment-to-population ratio because it's really the bottom line," Lazear said. "What that tells you is the number of people working relative to the number of people who could be working. That number is at an eight-year high at 60 percent."

Though still a ways off from pre-recession numbers, that employment-to-population balance indicates that labor force participation is getting better, Lazear contended.

He added that while the 2.8 percent uptick in wages isn't "gangbusters," it indicates "real wage growth [and] real increases in the standard of living for the typical worker."

Lazear said these trends signal a "mature" recovery supported by robust market activity and good data. The one laggard is productivity growth, which he said was "key" to a full recovery.

"It's the thing that affects labor demand. It means more jobs, it means higher wages. So, without productivity growth, we're not going to get there," Lazear said.

But there's a fix, and President Donald Trump and Washington Republicans are on the way to making it happen, Lazear said.

"My view is the way to get productivity growth moving again is to make sure that we lower the taxes on capital," the economist said. "Fortunately, both Congress and the president are talking about some reforms that will bring that about."