May’s Seriously Downbeat Jobs Report Puts Kibosh on Fed

New Post Public Reply Private Reply Replies (1) Message Board

Jun 3, 2016 at 5:20 PM

Quote:

May’s Seriously Downbeat Jobs Report Puts Kibosh on Fed Rate Hike; Underscores Need for Deep Infrastructure Dive

MIGHT be a good time to build and repair sh*t the way we used to without LOSING our sh*t over necessary spending, and before there was a Black president!

06/03/2016 10:15 am ET | Updated 6 hours ago

Jared Bernstein 

Fmr. Obama administration economist; CNBC and MSNBC contributor

In an unexpectedly downbeat jobs report, employers added only 38,000 jobs last month, the worst month for job gains since employment started recovering in 2010. Downward revisions trimmed the employment gains for the prior two months by 59,000, and the labor force participation rate fell again in May, as it had in April. That drove the unemployment rate down to a recovery low of 4.7 percent, but for the wrong reason: not because of people getting jobs but because of people leaving the job market.

Given the volatility in these monthly reports, I have been appropriately cautious in suggesting that the U.S. job engine has truly downshifted.

However, a look at JB’s monthly smoother now at least tentatively supports that conclusion. Going from 12, to 6, to 3 month averages of monthly job gains shows a steady deceleration from 200,000 to 116,000.

Source: BLS, my calculations.

This new, slower trend could, of course, reverse if growth picks up and part of May’s very low topline number is due to the strike at Verizon, a one-off event which, according to the Bureau, reduced the payroll count by about 35,000. But even adding those information workers back into May’s tally, the three-month bar in the smoother would rise to 127,000, still well below the 200,000 trend over the last 12 months.

The negative report surely puts the nail in the coffin of a Fed rate hike at their meeting later this month. Prior to the report, the futures market probability of a June hike was about 20 percent. After the release, it quickly fell to 4 percent.

Weak job creation is weighing on the labor force participation rate, which is down 0.4 tenths of a percent over the last two months. At 62.6 percent, the LFPR is back to where it was last December. While retiring baby-boomers have been correctly cited as a structural—vs. cyclical—factor lowering participation, the recent decline has also occurred among “prime-age” workers, those 25-54. In other words, what we’re seeing here is more than a benign, demographic trend; it’s a trend that is also a function of weak labor demand failing to pull people into to the job market.

Most goods-producing industries shed jobs in May, including durable manufacturing, down 18,000. Over the past 12 months, this important manufacturing sub-sector has shed 80,000 jobs, a sharp reversal from the addition of 120,000 jobs in the prior 12 months. The stronger dollar, which makes our exports less price-competitive, is a major factor in this unfortunate turnaround.

Another sign of weak labor demand was the increase in involuntary part-timers — i.e., those who would prefer full-time jobs — by 470,000. Again, the monthly series is noisy, so we should discount the large jump, but the underemployment rate, which includes these workers, remains stuck at 9.7 percent, at least a point above where it would be in a full-employment job market.

There were some bright spots in the report. Job creation in health care continues to churn along, with employment up 46,000 last month and about 490,000 over the past year. As we’ve shown, this favorable trend coincided with the advent of health care reform’s premium subsidies and Medicaid expansion; it’s unlikely that’s a coincidence.

The unemployment rate for workers with at least some college attainment held at lower than average rates of about 4 percent for those with some college and 2.4 percent for those with college degrees, and their LFPRs did not fall in May.

Finally, wage growth rose a mild 0.2 percent over the month, but is up 2.5 percent over the past year. That’s an acceleration over the 2 percent growth rate that prevailed last year at around this time.

The lower trend in job creation that appears to have taken hold could, as noted, reverse. Real GDP growth in the first quarter of the year was less than 1 percent, and current forecasts for the second quarter are tracking well above that. Then there’s the strike, and weather issues could also be adding noise to the data.

But it would be a mistake to write off these dour numbers. Moreover, while the Fed can certainly do no harm by holding rates steady, that’s not the same as helping.

Fiscal policy is looking more and more like an essential, missing ingredient in labor demand, and with borrowing costs still as low as they are, a smart move by policy makers would be to quickly start up an infrastructure program, perhaps in areas of water safety or repairing our deteriorating stock of public schools.

Clearly, in the midst of both political dysfunction and a contentious election, this would be a heavy political lift. But it’s still the right thing to do.

http://www.huffingtonpost.com/jared-bernstein...78700.html

Frank Cook · President at Association Computer Services

The Republicans have been blocking all spending and then blaming Obama for the stagnant economy which their obstructionism has produced. Trump has, however, called for infrastructure spending.

Democrats need to call his bluff. Introduce a clean infrastructure spending bill that does only what Trump says we should do, and then be ready on the debate trail when Paul Ryan refuses to bring it to a vote.

Newer

Older

Scroll down for more posts ▼

Top 10 Most Recent News Articles

Job Market Shifts: Adaptation vs. Fairness Dilemma

The Chameleon Effect in Today's Job Market Walk into any open-space office these days, and you'll see faces plastered with composed, work-ready smiles—faces that might not look so familiar outside those walls. The modern workplace has draped its cloak over individual personalities, with the mighty pressure to 'fit in' often forcing a change in how folks present...

MCatalysis Secures $5M to Disrupt Fuel Cost Dynamics

Funding Fuels Innovation MCatalysis has just secured a hefty $5 million in seed funding to throw down with the big dogs in energy production. This isn't your regular backyard science project; this company is serious about changing the game with a tech-driven approach that could undercut current fuel prices. HL Energy Ventures and Oxford Science Enterprises are backing...

LeoLabs and SciTec Partner for $93.7M Space Force Deal

LeoLabs and SciTec Join Forces for Space Dominance The space race ain't just about rockets blasting off anymore. It's about making sure we've got eyes everywhere, even on the back of our heads, so to speak. Enter LeoLabs teaming up with SciTec to help the U.S. Space Force upgrade their radar systems to something out of a sci-fi flick, armed with a $93.7 million contract...

Cap Juluca: Caribbean Luxury Redefined on Maundays Bay

The Tranquil Call of Maundays Bay Find me dipping my toes in the sands of Maundays Bay come October 10, 2026, and you'll understand why this slice of Anguilla stakes its claim to being the best beach on the globe. Cap Juluca, that crown jewel of Caribbean luxury, swings open its doors once more, promising indulgence framed by turquoise waters and the soft whisper of white...

EFSI Shareholders on Alert Amid M&A Deal Scrutiny

Eagle Financial Services Under the Microscope A buzz is picking up in the world of mergers and acquisitions, and this time, it's Eagle Financial Services, Inc. (NASDAQ: EFSI) caught in the crosshairs. What's the chatter all about? Well, it looks like Juan Monteverde and his crew over at Monteverde & Associates PC have set their sights on Eagle's proposed sale to John...

CUBEX Lights Up Veterinary Care with Mini Essential

Inventory Woes? Meet Mini Essential If you’ve ever worked in or around veterinary hospitals, you know the old-school headaches of managing controlled substances. Picture this: piles of paper logs, end-of-shift recounting, and inevitable discrepancies that rear their ugly heads long after closing time. Enter CUBEX, shaking things up with their latest launch, Mini...

Midlife ADHD in Women: New Challenges and Solutions

ADHD Evolution in Women's Midlife They say change is the only constant, and boy, does that ring true for women navigating the turbulent seas of ADHD as they hit 40 and beyond. According to Germaine Swanson, the ADHD landscape changes dramatically in midlife, especially for women. We're talking about a mix of hormonal shifts, increasing life demands, and changes in brain...

Global Communication Works Opens SignlLabs™ AI Licensing

AI Signaling Moves Beyond GCW's Own Clients Remember when we first looked at GCW's SignlLabs and the idea of helping brands show up inside ChatGPT, Gemini, Claude, Copilot and Perplexity? Well, Global Communication Works is taking the next step. Instead of keeping its AI Signaling playbook inside the agency walls, GCW is now opening SignlLabs up for licensing

RARE Foundation Rebrands, Focus Still Strong

Unveiling the RARE Foundation's New Identity In the stock market, you ride waves of change, and let me tell you, it ain't just stocks and bonds that change names and faces. Case in point: The EveryLife Foundation for Rare Diseases has spiffed up as the RARE Foundation. New name, new logo, the whole enchilada. This isn't just a cosmetic touch-up, though. It's about...

Sacrifice Unending: 9/11's Lingering Health Toll

The Unseen Toll of 9/11 on the Firefighter Community Two and a half decades since that fateful morning of September 11, 2001, we're staring at a grim reality. The heroic souls of the New York City Fire Department (FDNY)—those who ran toward peril when others ran away—are still paying the price. Incredibly, more than 400 FDNY members have succumbed to World Trade...