The No-Good, Terrible May Jobs Report
It's hard to conclude anything other than that the May jobs report was a complete and utter disaster for the economy and, perhaps, President Obama’s chances for reelection.
Employers created just 69,000 jobs last month, the Labor Department said on Friday. That’s the fewest since May of last year. Economists had been expecting nonfarm payrolls to increase by 150,000. (In fact, the result was lower than what any economist polled by Reuters had predicted.)
Moreover, companies added 49,000 fewer jobs than previously estimated in March and April. Talk about a slowdown. The average monthly gain was 226,000 in first quarter vs. an average of just 73,000 in April and May.
Oh, and the U-3 unemployment rate rose to 8.2% from 8.1%. The broader U-6 gauge, which also measures underemployment, rose to 14.8% from 14.5%. The labor force participation rate did, finally, tick up to a still-low 63.8%, lending credence to the idea that the shrinking workforce reflects discouraged workers and not just demographics. Here is a sample of Wall Street opinion:
-- JPMorgan: "The May jobs report was disappointing and demoralizing ... Given the steady deterioration in labor market performance over the course of the year, our outlook for decent growth in the middle quarters of the year is now looking shopworn."
-- Barclays Capital: 'The May employment report suggests that the labor market recovery has lost significant steam in recent months.
-- IHS Global Insight: "2012 is beginning to look horribly like 2011 – initial high hopes that the recovery was kicking into high gear, subsequently dashed."
-- Citigroup: "Signs of extraordinary and lasting weakness in U.S. labor markets have been evident since the start of the expansion ..."
And a couple of factoids that give some insight into the true strength of the labor market
1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. (Now, this doesn’t take into account the aging of the Baby Boomers, which should lower the participation rate due to rising retirements. But is that still a valid assumption given the drop in wealth since 2006?)
2. If you take into account the aging of the Baby Boomers, the participation rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the participation rate would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.5%.
3. And, as the above chart shows — originally from Obama economists Christina Romer and Jared Bernstein in January 2009 –the current 8.2% unemployment rate is 2.5 percentage points above where Team Obama predicted it would be right now if Congress passed his trillion-dollar stimulus plan.
4. The median duration of unemployment rebounded to 20.1 weeks in May, and 42.8% were unemployed for longer than a half year.
5. Average hourly earnings rose just 0.1%. Coupled with a very stable overall inflation rate, real wages were likely flat in May.
The big question now: Does this report suggest the U.S economy is heading into recession, especially given the sharp slowdown in global economic activity from Europe to India to, perhaps most worrisome, China?
Consider this: Last year, the U.S. grew at just a 1.7% pace. Research from the Federal Reserve finds that that since 1947 when year-over-year real GDP growth falls below 2 percent, recession follows within a year 70 percent of the time. We are firmly within the Recession Red Zone.
The political implications are clear: Another Recovery Bummer. If you punch in a mild recession into the higher regarded Fair-Yale forecasting model, Mitt Romney wins 53-47 over Obama in the two-party vote share. But given the example of Jimmy Carter, who suffered a mild recession in his 1980 reelection year, the Fair model might be underestimating the damage to Obama from a double dip.
Bottom line: If Team Obama wasn't already in a state of panic, they probably are now. And U.S. workers shouldn't be far behind.
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Dec '10
Re: The No-Good, Terrible May Jobs Report
At least a few people stuck in the echo chamber might be *finally* starting to notice that the numbers don't match reality:
"The bad news shouldn't be that surprising. It confirms what some experts suspected all along – that the pace of economic growth never really justified the drop we saw in unemployment earlier this year. [. . .] Federal Reserve officials have suggested that earlier declines in joblessness may have less to do with an improving economy than the fall in the labor force participation rate."
Dec '10
Re: The No-Good, Terrible May Jobs Report
And when I say "a few," I mean "one."
Dec '10
Re: The No-Good, Terrible May Jobs Report
The question I hope has a positive answer is this: will electing Romney provide the stability and liberty required to put the nation back to work?
Apr '11
Re: The No-Good, Terrible May Jobs Report
I love the graph of Obamas stimulus predictions. In fact I can't get enough of it. Nothing so clearly illustrates how little the man and his lackeys know. Not one assumption or prediction that they made to generate that graph is right.
It is like a weather man predicting that cloud seeding will turn a thunderstorm into a spring shower, only to get a hurricane instead, and then saying "imagine how much worse the storm would have been without the cloud seeding".
Apr '11
Re: The No-Good, Terrible May Jobs Report
Valiuth: I love the graph of Obamas stimulus predictions. In fact I can't get enough of it. Nothing so clearly illustrates how little the man and his lackeys know. Not one assumption or prediction that they made to generate that graph is right.
It is like a weather man predicting that cloud seeding will turn a thunderstorm into a spring shower, only to get a hurricane instead, and then saying "imagine how much worse the storm would have been without the cloud seeding". · 2 minutes ago
That's half their economic spin. The first half is ignoring any bad numbers and count all good numbers, for example hearing Bob Beckel on "The Five" the other night touting how Pres. Obama has created jobs.
This half is, "Well it would have been worse." Of course, we could say anything on a hypothetical.
"Without the Stimulus, unemployment would have been 50%"
"Without the Stimulus, we'd have suffered the worst starvation event in the world's history."
"Without the Stimulus, not only would we have been unemployed, but also under constant threat of tiger attack."
Apr '11
Re: The No-Good, Terrible May Jobs Report
Can you still draw the happy upwards arrow through this data? Without officially analyzing the data I would say the arrow is now going sideways, at best.
Re: The No-Good, Terrible May Jobs Report
So far in Obama's speech today, he has blamed Bush, gas prices, the Middle East and euro crisis as "headwinds" slowing the economy
Apr '12
Re: The No-Good, Terrible May Jobs Report
Those numbers are so much worse for young workers and recent graduates.
Mar '11
Re: The No-Good, Terrible May Jobs Report
James Pethokoukis:
Bottom line: If Team Obama wasn't already in a state of panic, they probably are now. And U.S. workers shouldn't be far behind.
I'd reverse the order - Mr Obama has plenty of income to come when he is retired - 3rd and 4th fictional autobiographies, speaking tours, etc. His team will return to wherever they came from, and be fine, also.
I think U.S. workers will benefit from a President who believes in Capitalism, but it's gonna take a while, and there are much deeper reasons why employment is dropping - technological change, in particular, and the poor education system.
Feb '12
Re: The No-Good, Terrible May Jobs Report
Amen.
Actually, I've gotten two pieces of good news on the job front ... a promotion to assistant manager of my shoe store and a job interview for an administrative assistant position.
Apr '11
Re: The No-Good, Terrible May Jobs Report
C. U. Douglas
"Without the Stimulus, not only would we have been unemployed, but also under constant threat of tiger attack." · 27 minutes ago
I believe that tiger attacks are only a problem for people who haven't bought a tiger repelling rock.
Re: The No-Good, Terrible May Jobs Report
When you get a moment, Jim, would you offer a thought or two on what the Fed ought to do? Or rather, since the markets have since 2008 remained awash with Fed-provided liquidity, what the Fed can do?
Apr '11
Re: The No-Good, Terrible May Jobs Report
Wait Bush is a head wind? It is nice to know that headwinds can come from behind and the past. At least the euro and Middle East are actually happening now, and probably aren't helping the economic forecast, but Bush!? Has any one called him shameless on this thread yet? Well I will. He is a shameless excuse monger.
If Romney wins this election he will have to go to Texas to pick up the "buck" where it last stopped, because we know who doesn't have it.
Feb '12
Re: The No-Good, Terrible May Jobs Report
This graph needs to be show during every Romney stump speech on economy. It's their words; their predictions; their justification for the stimulus. All the evil things that Bush did, happened before that graph was produced! What better way to show the utter incompetence of the authors of that graph! Michael Mann may not live to see the stupidity of the hockey stick - but the stupidity of Obama's economic policy can be summarized in this one graph plus actuals!
BTW, I field-tested this. My very left cousin, after looking at this graph, agrees with incompetence charge (OK, he was Clinton supporter, so it's not quite fair test). Still - there is no other reasonable conclusion to be made!
Jul '10
Re: The No-Good, Terrible May Jobs Report
Valiuth
C. U. Douglas
"Without the Stimulus, not only would we have been unemployed, but also under constant threat of tiger attack." · 27 minutes ago
I believe that tiger attacks are only a problem for people who haven't bought a tiger repelling rock. · 6 minutes ago
I can never get those to work. Stupid technology.
Dec '10
Re: The No-Good, Terrible May Jobs Report
C.U., I think this concept could be put to general use:
Fail to implement Single Payer Medicine and we will be under constant threat of tiger attack.
Allow access to America's natural resources and we will be under constant threat of tiger attack.
Extend the current rates for marginal income taxes and we will be under constant threat of tiger attack.
Require photo identification at the polls and we will be under constant threat of tiger attack.
Everybody now!
Sep '10
Re: The No-Good, Terrible May Jobs Report
President Obama will begin pitching a "composite" recovery.
Dec '11
Re: The No-Good, Terrible May Jobs Report
Amy Schley
Amen.
Actually, I've gotten two pieces of good news on the job front ... a promotion to assistant manager of my shoe store and a job interview for an administrative assistant position. · 35 minutes ago
Congratulations, and good luck.
Mar '11
Re: The No-Good, Terrible May Jobs Report
Ye gods! Let us hope the answer Bernanke finally, belatedly arrives at is absolutely nothing. The last thing the US economy requires is any more of his wealth destroying QE madness.
Dec '10
Re: The No-Good, Terrible May Jobs Report
This graph is similar to the one Peter Meza provided above, except it comes from the WH website, where the spin is:
And:
The Romney campaign should emphasize daily that Democrats aren't interested in prosperity for all, only redistribution from some in the name of what they determine is fair.