The Disappointing Employment Report
The jobs report is very disappointing. The BLS reports: that employment grew by 54,000 and the unemployment rate ticked up from 9.0 to 9.1 percent.
Nonfarm payroll employment changed little (+54,000) in May, and the unemployment rate was essentially unchanged at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains continued in professional and business services, health care, and mining. Employment levels in other major private-sector industries were little changed, and local government employment continued to decline.Remember that we need between 100,000 and 150,000 jobs per month just to keep up with population growth, and even more than that to reabsorb the millions who are out of work. So, the employment numbers mean that instead of making up lost ground, we lost additional jobs.
And, as Calculated Risk notes, if that's not bad enough, the numbers in previous reports were adjusted downward:
The change in total nonfarm payroll employment for March was revised from +221,000 to +194,000, and the change for April was revised from +244,000 to +232,000The labor force participation rate was unchanged at 64.2 percent, and the employment to population ratio was also unchanged at 54.8 percent. Thus, two other key measures of labor market performance remain stagnant and below their historical averages. The numbers are even worse for minority groups and unskilled workers, with the employment population ratio for teens reaching a low for this cycle, and the ratio for African Americans hitting a new low.
I wish I could report positive sign on the horizon, but there is little to suggest that the sluggish recovery -- or perhaps stalled recovery is a better descriptor at this point -- will change anytime soon. The economy is having a hard time recovering on its own. Balance sheet recessions are notoriously hard to escape, and there's little chance of additional help from monetary and fiscal policy. For fiscal policy, the best hope is that budget cuts don't make the situation must worse. For the Fed, the situation is similar. We are unlikely to get QEIII and more expansive policy, and we can only hope that the inflation hawks don't get their way and cause QEII to be reversed prematurely causing a contraction. So the "help" we are likely to get from policymakers isn't really help at all, it's the hope that policymakers delay doing things that are likely to make the picture even worse out of overblown fears over inflation and the debt.
I have been warning about the slow recovery of unemployment since my very first post here, and calling for policymakers to do more to help ever since. Policymakers have delayed doing more based upon hope rather than reality -- they always see "green shoots" just ahead and use that as an excuse to "wait and see" -- and the costs of failing to face reality and take action are now evident. Though we can't make up for the policy mistakes of the past, there's still plenty of time to do more to help the unemployed. Policymakers need to realize that unemployment, not the deficit, is the immediate crisis to be addressed and take action. Unfortunately for the unemployed, that's unlikely to happen.
See also: Caluclated Risk, Dean Baker, Angry Bear, Free Exchange, Jared Bernstein, Robert Reich, Kash Mansori, Peter Coy, Andrew Leonard, NY Times, WSJ, FT.
