Yay, the unemployment rate is down to 4.7 percent.
Boo, the labor participation rate dropped precipitously and is at historically low-levels.
So, what does the May jobs report mean? Is the economy finally getting better and moving off the sluggish cycle it has been stuck in for six years, or have we already seen the best of the worse recovery since the Great Depression?
First some facts –
- The number of people unemployed dropped by a whopping 484,000,
- The net increase in the number of people who were employed only rose by 26,000,
- The overall civilian labor force dropped by 458,000.
What this means is that a huge number people who were previously listed as unemployed changed their status to not in the workforce, while only 26,000 got jobs. By any measure that is an extraordinarily low number.
But what kind of jobs are people getting, full-time or part-time?
Of the 151 million people employed in the United States, approximately 27 million work part-time, this is not statistically different than one-year ago when there were 26.6 million part-time workers. In the past month, the number of workers who classified themselves as part-time for economic reasons — meaning, they want a full-time job — jumped by 468,000 workers with a large majority citing slack work or business conditions as the reason for the plight. This is bad.
However, compared to a year ago, the number of people who said they were part-time for economic reasons was higher, even with fewer people in the workforce. This is good as it shows that at least the number of people compelled to work part-time due to a bad economy has slackened somewhat, and that the percentage of the workforce in this condition has gone down.
Putting these numbers into context, they should worry every Democrat candidate hoping to run on a robust economy in November.
America’s economy has slunk along at an anemic rate over the past decade failing to reach even a 3 percent growth rate once over that period. On this measure, the economy for the past ten years has been the worse since the 1930s. And coming off of two dead in the water quarters with the Fourth Quarter of 2015 growing at a 1.4 percent annualized rate and the First Quarter of 2016 almost halving that at 0.8 percent growth, for the past six months the economy has been going in the wrong direction.
The previous two-years, it has been the Quarter Two numbers that have sparked hope that things were finally getting better. In 2015, the economy surged between April and June with a 3.9 percent growth rate and in 2014 it was even better at a 4.6 percent annualized growth rate.
Yet, in neither year were these numbers sustained as they merely offset horrifically bad First Quarter growth numbers.
While it may seem to be a cop-out, watch the Second Quarter GDP numbers that will first be reported in July, to get a better sense of where the economy is headed.
As for me, the downward revisions on the jobs numbers for the month of April may just be a portent of bad tidings for the Second Quarter, so if the jobs numbers mean anything (and I’m not sure they do) the tea leaves don’t look good for strong economic growth going into the election season that Democrats need to convince voters to give them a third consecutive four-year stint in the White House.
Wouldn’t it be ironic if Hillary Clinton loses the White House because it turns out after everything is said and done — it’s the economy, stupid.