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Ed Dolan's Econ Blog

Looking for the Good News in the April Jobs Report

The April jobs report from the Bureau of Labor Statistics is not a strong one. Most comments have focused on the bad news, especially the modest 115,000 increase in payroll jobs. If you look hard, there is some good news, too, although not as much or as easy to find as we would like.

Start my looking more closely at the numbers for payroll jobs. The headline number was admittedly paltry. However, there were some welcome upward revisions for earlier months.  The March number was revised up by 34,000, to 154,000, and February’s by 19,000, to 259,000. All in all, the April report revealed 168,000 new jobs that we didn’t previously know about. That sounds at least a little better.

Next, turn to the unemployment rate. Hey, guys! It went down last month, but no one seemed to notice, not even the BLS. Their news release said, “The unemployment rate (8.1 percent) changed little in April.” When I read that phrase, I thought it must mean that the rate changed just a fraction of a percentage point, and that only rounding made it look like a decrease from 8.2 percent to 8.1. But no, when you do the numbers, you see that the rate fell from 8.19 percent to 8.09. Looks like a full percentage point to me.

Digging deeper into the unemployment numbers, there is both bad news and good. The bad news is that the drop in the unemployment rate came as both the numerator (unemployed persons) and denominator (the labor force) decreased. As far as the strength of the economy goes, it would have been more encouraging to see both components increasing, even if the ratio increased at the same time. You know, though, that if the rate had risen to 8.3 percent while the household survey showed 200,000 new jobs, it would be the uptick in the rate that made the headlines.

Another disappointment was that the broad measure of unemployment, U-6, did not budge. Seasonally adjusted, it remained at 14.5 percent, the same as in March. Many people see U-6 as a more accurate measure of “job market distress” because it includes discouraged workers who would like to work, but don’t look because they think no jobs are there, and also people who work part time but would prefer full-time hours.

On the other hand, the long-term unemployment rate did drop. One of the nastiest features of the Great Recession has been that the proportion of unemployed workers who have been out of work 27 weeks or more has reached highs unseen since the 1930s. As the chart shows, it is now finally beginning to move downward, and the rate of decrease has accelerated in the last two months.

Why aren’t things better? The Republicans seem to think that runaway government is standing in the way of a strong expansion. They would like to see more European-style spending cuts. Loss of only 15,000 government jobs in April was not enough. They would like to maintain a tight grip on monetary policy, so that when the election outcome produces a confidence-led boom, we don’t fall victim to inflation. Others think the opposite. The market monetarists would like to see much more expansionary monetary policy aimed at getting nominal GDP back on track. Progressives like Paul Krugman would like to see more good old fashioned fiscal stimulus. It’s a pretty safe bet, though, that nothing will change before the election.

Follow this link to view or download a brief slideshow with charts of the latest employment numbers.

 

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