The headline number from the BLS’s Establishment Survey was an addition of 115,000 jobs for the month of April. That is a terrible number for this far into the recovery, as it fails to keep up with population growth. At this time in the Reagan recovery, the economy added a population-adjusted 480,000 jobs. So why did the unemployment rate (U3 number) drop another 0.1% to 8.1%? Let’s delve through some of the data from the Household Survey:
There will be those who will blame this all on the aging population, but the bottom line is that job creation is not keeping up with new population growth. Also, while there is a long-term trend of baby boomers retiring, the fact that there has been such a precipitous drop in the participation rate the past two years is reflective mainly of the weak economy. Here are the relevant charts from Zero Hedge. Don’t tell me that such a precipitous drop is due primarily to the long-term factor of aging. There is a reason why nobody on the street is feeling this recovery, even though the U3 number has dropped almost a full point over the past 6 months, and it has nothing to do with the aging population. It has everything to do with the anemic economy.
So this is the new normal in America. We will continue flat lining at (or near) the bottom of the employment trough indefinitely and more people will leave the workforce, even as the population continues to grow. Hey, maybe we can get the unemployment rate down to 4% like this.
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