25 April 2024

Reactions to April’s Jobs Report Vary in Focus

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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.

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