Job growth in May worst in 5 years
President Obama was on the campaign trail on Wednesday in Elkhart, Indiana, bragging about how well the economy is doing and criticizing Republicans for their refusal to accept what a great job he was doing.
Without mentioning any presidential candidates by name -- Democrat or Republican -- Obama lambasted what he said were economic myths peddled by the GOP, insisting any clear-eyed assessment shows the country better off now then when he took office.
Speaking in Elkhart, Indiana, a city he frequented at the beginning of his term as he worked to stave off an economic depression, Obama listed every major economic achievement of his presidency, from expanding overtime rules to tightening regulations on big banks.
Amazing what he considers "economic achievements." Overregulation and a burden on small businesses? Sheesh.
And as far as things being better off than when he took office, he didn't mention he made things worse before they got better.
The unemployment report for May is an absolute disaster. "Unexpectedly," after economists predicted that 164,000 new jobs would be created, only 38,000 nrew jobs were counted. While the "official" unemployment rate dropped to 4.7%, the reason for the drop was familiar: more people became discouraged about looking for work and dropped out of the labor force entirely. In fact, that broader measure of joblessness was more than twice the "official" rate: 9.7%.
The workforce shrunk by 458,000 in May, and the labor force participation rate dropped by 0.2 percentage points to 62.6 percent, indicating that the unemployment rate fell because the denominator shrunk, rather than because of job gains.
The drop in labor force participation also mostly reversed recent gains that had driven the participation rate from as low as 62.4 percent in September to 63 percent in March.
Labor force participation has dropped precipitously since the eve of the financial crisis to rates not seen since the late 1970s, a decline that reflects both demographic factors like the ongoing aging of the Baby Boom generation into retirement and the fact that many workers became so discouraged by their job prospects that they quit the job hunt entirely. Economists have arrived at different conclusions about how many quitters there may be, but before the past two months' reports it had appeared that the jobs market was tight enough to draw more people into the job search.
Earnings growth also failed to show acceleration, at 2.5 percent annually.
The sector with the strongest growth in the month was health care, which added 46,000 new jobs, to bring yearly gains up to nearly half a million.
Meanwhile, the energy sector continued to show the enormous strains of the collapse in oil prices over the past two years. Mining jobs, a category that includes drillers and oil field services, contracted by 10,000. Since September of 2014, the number of mining jobs has declined by 207,000.
Investors and government officials were watching Friday's report closely for signs that the jobs recovery remains intact.
Members of the Federal Reserve, in particular, have highlighted the payroll numbers as one of the key factors to watch ahead of their June monetary policy meeting. Fed Chairwoman Janet Yellen said last week that a rate hike in June or July would probably be appropriate "if the labor market continues to improve."
That nearly half a million American workers were so discouraged that they stopped looking for work in May at this point of the "recovery" is astonishing. The anemic 0.2% rise in payrolls also points to a lot of slack still in the labor market. Employers do not feel the need to offer better salaries in order to attract workers.
The Fed is abandoning plans to raise interest rates – at least for the moment. That may change after a couple of robust months of job growth, but given the numbers this month, you have to wonder when that might happen.