The Labor Department’s Bureau of Labor Statistics reported that the economy added only a startling few 38,000 jobs in May, the weakest number in six years.
The official unemployment rate declined dramatically to 4.7 percent, recording not new hiring but new discouragement. More than 15 million people remain in need of full-time work. The Obama administration will hail the record 75th month of private sector jobs growth, the declining unemployment rate and warn about putting too much weight on any monthly report, but this jobs figure has to alarm.
The disappointing May number was driven lower by the 35,000 striking Verizon workers, but even with those jobs, employment clearly is flagging. The BLS also lowered previously reported jobs growth in March and April by 59,000. The past three-month average increase in employment has been trending down (196,000 in March, 181,000 in April, 116,000 in May). The labor force participation rate – those with jobs or looking – declined again to 62.6 percent. It has declined since the recovery began and now is as low as it was in the late 1970s before women began entering the workforce in large numbers.
Manufacturing and mining sectors continue to lose jobs. Health care was virtually the only bright sector, adding 46,000 jobs in the month.
The implications of the disappointing number are clear. The Federal Reserve governors should stop talking about raising interest rates again. Fed Governor Daniel K. Tarullo said last week that he was still looking for “an affirmative reason to move.” This report gives him ample reason to back off. This economy isn’t overheating, it is cooling off.
The report also reinforces what already should have been clear. Voters will remain in a surly mood. They are not likely to be satisfied with a slow-growth economy that isn’t offering much in terms of increased wages or increased security. Candidates who are the most plausible leaders of change will fare the best.
Democrats will find it difficult to run on the Obama economy. If Hillary Clinton wins the Democratic nomination, her challenge will not be proving that Donald Trump is unfit to be president; he’ll demonstrate that by himself. It will be to prove to skeptical Americans that she will fight for the fundamental reforms needed to make this economy work for working people. After wrapping herself around President Obama to win the primaries, she might want to consider embracing much of the Sanders agenda in the general.