The April jobs report is a pleasant surprise, adding 244,000 despite the sudden deceleration of growth in gross domestic product in the first quarter. For today, at least, it reduces fears of a stalled expansion, or even double-dip, that helped cause the sudden drop in commodity prices Thursday.
But looking ahead, it’s impossible to know if this represents a healing labor market. Economist Heidi Shierholz of the Economic Policy Institute said at this rate it will take until the fall of 2016 to return to pre-Great Recession employment levels. And that’s assuming no new financial crisis or other downturn. Indeed, April’s household survey showed the unemployment rate rising from 8.8 percent to 9 percent. (The job gains were shown in the separate, less volatile payroll survey). “The increase in unemployment was not due to formerly-sidelined workers deciding to look for work, as the labor force increased by only 15,000 in April,” according to Shierholz. Wonkish footnote: The payroll report benefited from an extra week in the survey period.
Mesirow Financial’s chief economist Diane Swonk blogged on the rate uptick:
I wish I could say it was because those who were previously marginalized by the recession regained hope and threw their hats back into the ring to find jobs. The reason the unemployment rate fell, however, was more disturbing. The household survey showed a decline instead of an increase in the number of people who said they had a job. Teenage unemployment posted a particularly large jump because some older workers are willing to take the minimum-wage jobs, usually filled by teenagers.
Bottom line: We remain in an unusual business cycle, largely because of the damage of the Great Recession and the many bad bets and imbalances yet to be unwound. A spring of continued growth in net new jobs might show a turning point.
Today’s Econ Haiku:
Stocks are up today
Because of (fill in the blank)
Who knows really why