Spring
stunner: Jobs report blows past forecasts
The labor market roared ahead in April as milder weather
helped employers add 288,000 jobs — the most in more than two years.
The unemployment rate fell to 6.3% from 6.7% — the lowest
since September 2008, the Labor Department said Friday. The decline, however,
came because the labor force--which includes those working and looking for
jobs--shrank by 806,000.
Click here
for the full article in USA Today.
Ready
for liftoff? Economists dig into jobs report
The government’s employment report for April shattered
economists’ forecasts for job gains and the unemployment rate. Here’s what some
were saying Friday morning after its release:
“The economy is better than you think. And Fed
officials are going to raise rates quicker than you think. Bet on it.” —
Chris Rupkey, chief financial economist, Bank of Tokyo-Mitsubishi
“While the report is likely to keep the tapering process on
track, it is unlikely to alter the Fed’s timeline for potential policy rate
hikes significantly. We expect the Fed to taper its monthly purchase pace by
another $10 billion at its June meeting and conclude purchases in October. Our
forecast also calls for the first rate increase in mid-2015.” — Michael
Gapen, Barclays Research
“More than likely, April was a bit of a rogue month, with
establishments picking up the pace of seasonal hiring on the back of several
months of relatively modest gains. Thus, the question of whether underlying
hiring trends have ramped up relative to the modest trends that we have seen in
the last several years still remains open.” — Brian Bethune, chief
economist, Alpha Economic Foresights
“The usual suspects will complain that the decline in the
unemployment rate was largely due to a massive 806,000 drop in the labor force,
which more than offset a disappointing 73,000 decline in the household measure
of employment. But the household figures are notoriously volatile, and the
labor force had increased by about 1.5 million over the past six months.”
— Paul Ashworth, chief U.S. economist, Capital Economics
Click here
for the full article in USA Today.
Young-adult
employment still far below normal
A blockbuster jobs report today masked some possibly
worrisome signals for young-adult employment.
The portion of Americans ages 25-34 who were working last
month fell to a five-month low of 75.5%, from 75.9% in March. By comparison,
the share of all Americans 16 and older who were working was unchanged at
58.9%.
A sharp one-month drop is not necessarily cause for concern,
since the jobs data are volatile. Over the past year, however, the share of 25-
to 34-year-olds employed was up just three-tenths of a percentage point. The
portion of other age groups working, including those 16-24 and 35-44, rose more
sharply.
“Young-adult employment still isn’t halfway back to normal,”
says Jed Kolko, chief economist of real estate website Trulia. Before the
recession, he says, nearly 80% of people in the 24-35 age bracket
were working.
Solid employment among that group is key to a healthy
economy. Those Millennials are typically first-time home buyers and big drivers
of the housing market, Kolko says.
Click here
for the full article in USA Today.
Wage Growth Indicates a
Not-So-Healthy Economy
The single best gauge of the economic recovery — better than
the headline unemployment rate — may be wage growth.
So ignore April’s sharp drop in unemployment. Pay no
attention to the creation of 288,000 jobs announced on Friday. The most
important number in the latest jobs report did not change at all.
Average hourly wages for American workers held steady at
$24.31 last month. They have increased just 1.9 percent over the previous 12
months. But after adjusting for inflation, real wages have increased by
something like 0.5 percent.
David G. Blanchflower, an economics professor at Dartmouth
College, and Adam S. Posen, president of the Peterson Institute for
International Economics, argue in a new paper that the slow pace of
wage growth is the best indicator of an incomplete economic recovery. Until
wages start rising more quickly, the economy remains far from healthy.
The two men also argue that the Federal
Reserve should focus on wage growth in calibrating its stimulus campaign
because wage growth effectively summarizes other measures like unemployment and
participation.
Mr. Blanchflower found affirmation for this theory in
Friday’s jobs report. In the traditional view, the decline of the official
unemployment rate should have indicated that the labor market was closer to
good health, and it should have put upward pressure on wages. But the
unemployment rate fell entirely because people stopped looking for work, not
because they found jobs. And wages did not rise by even a penny.
“What happened today is entirely consistent with what we
said would happen,” Mr. Blanchflower said in an interview by telephone on
Friday morning. “Hourly wages were up two pennies last month, and this month
they’re flat, and that tells you there’s too much slack in the labor market.
And all the other stuff is just noise.”
Their paper is the latest contribution to a raging debate
about labor market slack, a concept that is easy to explain, hard to quantify
and very important right now.
Click here for the full
column in the New York Times.