Economy Adds Paltry 54,000 Jobs in May
The US economy added 54,000 jobs in May, a sharp reduction from the prior three months that reflects a general economic slowdown. March and April employment statistics were revised slightly downward as well. The topline unemployment rate increased to 9.1%.
This is a bad jobs report. The economy needs to add roughly 125,000-150,000 jobs just to keep up with a growing population. So we’re well below that. In addition, the most important number, the employment-population ratio, remained at the low rate of 58.4%. That’s basically the same as it was in January, so really there’s been no movement since then. There are still almost 14 million unemployed people, with 6.2 million long-term unemployed (jobless for more than 27 weeks), 45.1% of that total. Add to that 8.5 million involuntarily working part-time, and 2.2 million “marginally attached to the labor force” who hadn’t looked for work in the last month. And those who have left the labor force completely aren’t even counted here. We’re getting into the territory of a lost generation of workers, who cannot find a job and completely change their lifestyle, turning to family or just walking the streets.
Private-sector jobs increased by 83,000, while jobs in government fell by 29,000, another month of public-sector job losses. As state budgets get finalized and perhaps a federal deal on deficit reduction as well over the next couple months, that number will keep trending down, as less money becomes available for paying public workers. Manufacturing jobs actually fell last month by 5,000, a reversal of their trend upwards in recent months. The average workweek was the same and the average hourly earnings increased by 0.3%.
This week brought home pretty starkly that there is a major problem in the economy. The unemployment rate is not trending well. Growth is slowing. Millions are sitting idle. Nobody’s really doing much about it. Washington still thinks deficits are the biggest problem to solve. I know a lot of people dismissed that article by Binyamin Applebaum about the relationship between unemployment and re-election performance: Nate Silver ran the numbers. But Nate also said that, while citing a particular numerical threshold was unwise, “The higher the unemployment rate in November 2012, the less likely President Obama is to win a second term.” The unemployment rate is extremely high, and nothing the government is likely to do over the next year and a half is designed to bring it down.
UPDATE: Jared Bernstein reacts: “Details to follow, but YUK.” Says it all.