For the second straight week, the US reported disappointing results for its economy. Last week the Bureau of Economic Analysis pegged the Q1 GDP growth rate at an anemic 0.5%, marking yet another lost winter in the Obama “recovery.” This morning, the Bureau of Labor Statistics announced that Q2 didn’t get off to a rousing start either, with only 160,000 new jobs added, the third month in a row of declines:
Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Job losses continued in mining.
In April, the unemployment rate held at 5.0 percent, and the number of unemployed persons was little changed at 7.9 million. Both measures have shown little movement since August. (See table A-1.) Among the major worker groups, the unemployment rate for Hispanics increased to 6.1 percent in April, while the rates for adult men (4.6 percent), adult women (4.5 percent), teenagers (16.0 percent), Whites (4.3 percent), Blacks (8.8 percent), and Asians (3.8 percent) showed little or no change. (See tables A-1, A-2, and A-3.)
Job gains from the last two months got revised downward by 19,000:
The change in total nonfarm payroll employment for February was revised from +245,000 to +233,000, and the change for March was revised from +215,000 to +208,000. With these revisions, employment gains in February and March combined were 19,000 less than previously reported. Over the past 3 months, job gains have averaged 200,000 per month.
The U-3 jobless rate may have stayed the same at 5.0%, but the basis for that calculation declined in both labor-force participation measurements:
In April, the labor force participation rate decreased to 62.8 percent, and the employment-population ratio edged down to 59.7 percent. (See table A-1.)
The labor force participation rate remains near its 39-year low. This impacts the U-3 jobless measure because the calculation is based on labor force size as a denominator in the equation; the smaller the labor force, the smaller the U-3 rate. The civilian labor force dropped by 362,000 in April, more than double the number of new jobs created, which is one reason why U-3 stayed at 5.0%. Bear in mind that the US population grows by roughly 0.78% a year, or about 2.5 million people. In order to maintain the current labor force rate of 62.8%, the US economy has to add 1.6 million jobs a year, or at least 134,000 a month; at . Sharp declines in the labor force show something’s very wrong in the labor market.
The chart depicting the last ten years of this measure shows the sharp decline in labor-force participation that the so-called recovery has produced (gray areas are recognized recessions):
The other measure — the employment/population ratio — shows that we have never recovered from the recession in unemployment:
Reuters acknowledges that the U-3 number’s steadiness belies a larger problem, and notes that the report missed the forecast by 20%:
Employers added 19,000 fewer jobs in February and March than previously reported. While the unemployment rate held at 5.0 percent that was because people dropped out of the labor force.
Economists polled by Reuters had forecast payrolls rising 202,000 last month and the jobless rate unchanged at 5 percent.
The AP’s Christopher Rugaber points out that this is not an outlier, but a trend:
The job gain was down from the average increase of 200,000 over the past three months, which is the softest three-month pace since October.
The slowdown may raise concerns that weak U.S. economic growth has discouraged some employers from hiring. The economy’s growth has slumped to a sluggish 1 percent annual rate since October.
The economy, which has never been healthy since the Great Recession, appears to be sliding to either a lower level of stagnation than we’ve seen over the last six years since the technical recovery began, or something worse. That will shake up the election cycle, and might complicate the Obama administration’s efforts to push through more of its lame-duck economic policies.