unemployment rate

Unemployment Rate Drops to Lowest Level in Decades

May 3, 2019 By Amanda Blankenship Leave a Comment

The United States job market continued to excel in April, adding 263,000 new hires. On top of the huge increase in jobs, the unemployment rate fell to its lowest point since 1969. It is now sitting at just 3.6 percent. That is the lowest level of unemployment the U.S. has seen in a generation.

The Unemployment Rate Has Plummeted Under Trump

The last time unemployment was this low was in December 1969 (at the time, it was 3.5 percent). If this job growth continues, it will be the longest economic expansion in U.S. history. Not to mention, job growth beat all of the Wall Street expectation. It was expected that payroll growth would be around 190,000 and the unemployment rate would be sitting at 3.8 percent at the end of April. Job growth was much larger at 263,000 new hires and only 3.6 percent of Americans are jobless.

Average earnings growth has held pretty steady over the past year, however, at 3.2 percent. The average salary in America sits at $27.77 and the average workweek hovers around 34.4 hours.

While the total unemployment rate is down, a broader gauge of the unemployed (including underemployed and people who have quit looking for work) still sits at 7.3%. That hasn’t changed since February, but it doesn’t have economists worried.

“Leaving aside month-to-month fluctuations, the labor market is still very strong, adding almost double the number of workers needed to keep pace with new entrants to the labor force in any given month,” said Eric Winograd, AllianceBernstein’s senior economist. “Wages may have been slightly tepid this month relative to expectations but are still growing at just about the highest rate this cycle, and the unemployment rate is at multi-generational lows.”

Where Are The Jobs?

Business and professional services saw an increase of 76,000 jobs in April, leading job growth during the month. Construction added another 33,000 jobs during the month (256,000 throughout the past year). As always, the health care field is booming. It added 27,000 jobs in April (404,000 in the past year).

Jobs pertaining to finance rose by 12,000 (mostly real estate, rentals, and leasing). Both manufacturing and social assistance saw increases of 4,000 and 26,000, respectively.

Unsurprisingly, the retail job market saw a loss of 12,000 jobs in April, as many retailers are struggling to keep up with Amazon.

All in all, job growth has been consistent under President Trump. Month-to-month gains have averaged at 205,000 jobs per month.

Labor Department Says Economy Created 280000 New Jobs in May

June 7, 2015 By Lori Kelley 3 Comments

The Labor Department says job numbers increased 280,000 in May

The economy appears to be in better shape than many economists had thought. The Department of Labor released the monthly jobs report which featured strong numbers for May. The report showed US businesses added 280,000 new positions for the month, more than the 220,000 jobs economists had anticipated.

At the same time, the unemployment rate increased to 5.5% from 5.4%, which had hit a seven year low last month. While an increase in the unemployment rate seems counterintuitive with the increase in the number of jobs for the month, there seems to be a pretty straightforward explanation. Economists believe with more jobs available and the end of the winter season cold, more people in the US are once again looking for work, increasing the number of people actively looking for employment.

This is especially good news since the job growth numbers for the first quarter of the year had been lower than predicted. Job numbers for January, February and March had been lower than had been anticipated, which had economists questioning whether or not the economy was recovering. The latest numbers give economists hope they were an aberration due to harsh winter weather, rather than a trend and something to worry about long-term.

The numbers are good for both employers and employees. They show businesses are in need of labor, and this is leading to a slight increase in the wages employees are earning. Economists are predicting the job market will remain strong with good job growth numbers through the end of 2015.

There are some numbers hidden in the good news that may make some economists pause. A broader unemployment definition which includes part-time workers looking for full-time employment, and the long-time unemployed people who would like to work, but have given up finding a job has not shown signs of improvement. That rate remained steady at 10.8 percent, something economists would have liked to seen drop with the improving economy.

With a sense of relief with the May numbers, the next date economists will be eyeing is June 17. This is when Federal Reserve Chair Janet Yellen will give her thoughts to the press on where she feels interest rates should be.With interest having been near zero for a long period of time in hopes of stimulating the economy, the new numbers may help her decide it’s time to raise them a bit. If she does, it will be a sign that the Federal Reserve is confident the US economy is in a strong position and it has moved on from the Great Recession.

(Photo courtesy of MITD Gallery)

The Unemployment Rate Drops to Seven Year Low

May 18, 2015 By Lilian Nwa Leave a Comment

The Goldilocks principle posits that “something must fall within certain margins, as opposed to reaching extremes,” and a recent report from the U.S. Labor Department suggests that the U.S. economy is sticking strictly to this tenet. According to Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds who spoke to Bloomberg Business, “It’s not a bad report for the economy, but it’s not so good it raises concerns about the Fed taking the punch bowl away,” referring to the Federal Reserve’s possible increase in interest rates sooner than initially believed.

In terms of the numbers, 223,000 jobs were added last month, a much larger number than the disappointing 85,000 jobs added in March, the lowest such gain since June 2012. As well, the Labor Department report outlined that the unemployment rate dropped to 5.4 percent, a new seven-year low and a decrease from March’s unemployment rate of 5.5 percent. Previously, investors and experts had blamed March’s dismal numbers to the “exceptionally cold winter,” which hindered hiring and recruiting processes. It seems with the thawing of the snow, the U.S. economy is similarly looking for new opportunities and chances for growth.

One should note, however, that though many economists believed pay increases would follow the drop in unemployment, this has not been the case. As reported by The Dallas Morning News, even “before Friday’s report, some economists were estimating that average hourly earnings might rise 0.2 percent or more in April…But average hourly earnings rose only 0.1 percent in April.” This suggests that “meaningful wage gains” are still being delayed. As Tara Sinclair, chief economist for Indeed.com told The Dallas Morning News, “There’s still slack” and employers feel little pressure to increase salaries.

Despite the generally good news about the U.S. economy, one industry has experienced steady and sharp declines as the result of oil price declines over the past year. As a sign of the times, Reuters reports that Schlumberger, the world’s No. 1 oil-field services provider, was forced to cut 11,000 jobs last month alone and has in total dismissed 20,000 workers and mining payrolls “fell 15,000, logging the fourth straight month of declines.” Conversely, Reuters reports that whereas the energy and mining industries experienced hardships, construction payrolls as well as manufacturing and private services employment, all saw increases in their payroll. Given this news, economists now believe that the Fed will surely raise short-term interest rates above their near zero value, though no one is yet sure when this raise will occur.

(Photo courtesy of Public Information Office)

US Economy Adds 257,000 New Jobs in January, 1 Million in Three Months

February 7, 2015 By Lilian Nwa 2 Comments

257k jobs created in January, 1 million in the last 3 months

Last month, approximately 257,000 new jobs were created in both high- and low-paying industries according to a report from the Labor Department on Friday. The past three months have now seen the addition of 1 million jobs and thus represents the “best such stretch” since 1997.

Previously, economists had acknowledged the addition of new jobs and an overall decrease in America’s unemployment rate; however, some criticized the lack of wage growth, while others claimed raising the minimum wage would be “the death of common sense.”

Friday’s report, however, provides something for everyone. To begin with, USA Today reports that the average hourly earnings increased 8 cents to $24.75 an hour, an increase of 2.2 percent since last year. As said by Paul Ashworth, “Employment growth is clearly on fire and it’s beginning to put upward pressure on wage growth.” Which brings us to the second point: the increased wage growth and earnings were because “the minimum wage rose in 20 states,” which did not result in a subsequent decrease in employment.

Even what was considered ‘bad news’ in the report was not terrible — unemployment increased to 5.7 percent. However, economists have said that this increase was not due to higher wages but was because over 700,000 more people “jumped into” the civilian labor force in January. As a senior analyst at Moody’s told the L.A. Times, “The labor market is gaining momentum. Employers have strong enough demand for their products and services that they really have to start ramping up their hiring.”

Still, it is promising to see an increase in the number of people joining the labor force. As Gary Burless, Senior Fellow at the Brookings Institute explained, one of the most disappointing features of the recovery efforts thus far has been that the labor force participation rate has remained low. Forbes contributor Louis Efron echoed this sentiment when he wrote about the labor force participation rates in August 2014, and warned readers that the unemployment rate then was closer to 12.6 percent (instead of 6.2 percent) if one considers the number of people “marginally attached to the labor force” and those “employed part time for economic reasons.”

Still, in Burless’ article, he writes that as real wages improve, this will likely increase the participation rate of adult workers–and it’s possible he is right. The New York Times interviewed Frank Walsh, a former electrical worker who has been out of work and he told the reporter he would work for a restaurant, “but they’re only willing to pay $10 an hour…I’m 49 with two kids–$10 just isn’t going to cut it.” Essentially, as described in the Times, the availability of federal disability benefits, rise of the Internet (which decreases the isolation felt when unemployed) and decline of marriage has made it easier for people (particularly men) to live without working. Increasing wages might then incentivize people to search for work.

Of note, it is really the private sector driving the recovery of the US job market. Whereas this sector added 267,000 jobs in January, the federal government cut 10,000 positions. Furthermore, lower-paying private jobs (i.e. retailers, restaurants) have seen the greatest increase though construction, manufacturing and business have also seen large increases.

At this time, the latest jobs report has been positive enough that the Federal Reserve is considering raising interest rates as early as June. This might seem counterintuitive (for example, mortgage, car loan and credit card rates would go up); however, the Foundations for Living website has a wonderful analogy for why this isn’t so. Federal rates are like merry-go-rounds and the Fed is responsible for making sure the merry-go-round is not moving too slowly (in which the Fed decreases interest rates and borrowing is easier) or too quickly (in which interest rates go up and borrowing becomes harder). In this way, interest rates are carefully calibrated to avoid “boom and bust extremes.”

At this time, however, federal officials are still monitoring wage growth as a final indicator our our economy’s health. If things continue to improve, we might see an increase from our current “rock-bottom, short-term interest rates.”

(Photo courtesy of reynermedia)

Strong December Jobs Report Looks Good, but Wages Fail to Keep Pace

January 9, 2015 By Lilian Nwa 3 Comments

Job report is best in 15 years, but wages still lacking

The years 2008 and 2009 were characterized by loss: the loss of approximately 8.4 million jobs, the loss of consumer confidence in the markets, as well as steep declines in the values of homes. What did increase were the federal debt, inflation, and the numbers of personal bankruptcies filed by individuals. Eventually, the economic decline in world markets reached its bottommost level, and ‘loss’ in its many manifestations (i.e. job, home, savings) became the status quo.

Nearly five years later, however, economists have declared 2014 the best year since 2009. According to the Christian Science Monitor, 200,000 jobs were added each month during 2014 in what the Wall Street Journal called the “best year of job growth in 15 years.” Additionally, the New York Times reported that many of the recently created jobs are higher-paying opportunities in industries that have been especially aggressive in hiring, such as health care and construction work. Overall, between 2013 and 2014, the unemployment rate decreased over a full percentage point, to hold at 5.6 percent in December 2014.

Despite this good news, researchers have cautioned against reading the report through a rose-tinted lens. In particular, despite this year’s robust job growth, hourly earnings in December rose only 1.7 percent compared to this time last year, barely above inflation rates.

The result of this mathematics is firms are able to collect and protect their profits, while many U.S. households will be unable to increase their living standards. In fact, Federal Reserve officials have used this data to suggest that the economy is “far from its full capacity,” though the dollar has been at its highest point in years, another sign of economic improvements. As Elise Gould tells SF Gate, “…we are still digging our way out of the recession, and wage growth remains stagnant and untouched by recovery.”

But 2014 is gone and some analysts believe that 2015 will be “the year of the consumer,” given declining oil prices and the lower costs for imported goods. In fact, an economist questioned by SF Gate likened the lower oil prices to a $1000 pay raise, if prices remain low. Additionally, Mark Znadi, chief economist at Moody’s Analytics, told the New York Times that as the economy heads toward a 5 percent unemployment rate, wage growth is also expected to increase.

Millions of Americans, however, are still searching for full-time employment, while others have dropped out of the labor force altogether. As Dan Greenhaus, chief strategist at the brokerage firm BTIG told WSJ, “The simple fact is we cannot consider an employment report a success…if wage data does not begin to accelerate” as well as the number of Americans with work.

(Photo courtesy of Tess Aquarium)

unemployment rate

The Unemployment Rate Has Plummeted Under Trump

Where Are The Jobs?

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