According to the BLS, we added 120,000 jobs in the month of March. While that might sound good, and it is certainly better than losing jobs, it is not enough to keep up with the population growth, much less make up for the jobs lost during the recession. This is the first recession in American history where we are nowhere near pre-recession employment levels so long after the end of the downturn.
The media will make a big deal over the fact that the unemployment rate dipped 0.1% to 8.2%, but it is actually indicative of a mediocre labor market. Let’s remember that the population is always growing and needs a certain number of new jobs just to break even with the growth. In March, the workforce population grew by 169,000, dwarfing the 120,000 net new jobs created that month. So why did the unemployment rate drop slightly? You guessed it: it’s the labor participation rate once again. Another 164,000 dropped out of the labor force. When coupled with the additional population growth, there are now 333,000 more people not in the labor force relative to the previous month.
That is really bad news for this stage in the recovery. The high energy prices will only exacerbate the situation over the next few months. Welcome to the Keynesian recovery.
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