People will tell you “the last jobs report was good!” Show ’em these two charts re: unemployment rate and labor force participation.

Chart 1:


Chart 2:


Both charts are via here. The easy headline for the jobs report is “288K new jobs created!” or “Unemployment rate drops to 6.3 percent, lowest in years!” An even more robust header for it might be “The U.S. is back!” While ideally the third statement is true, look at the two charts above for some additional context on the overall jobs report. Basically, 806K people left the American work force in April — that’s partially people giving up on their long-term job search, partially people aging out, and partially people essentially giving up on jobs by going back to school — which is about three times the number of new jobs created. The 806K people exiting is primarily the reason for the unemployment rate drop. That labor force participation chart? Our labor force participation is at its lowest level since the 1970s. You’re going to see this narrative continue to play out for 10-20 years. Bottom line: U.S. is doing better than 4-5 years ago, unquestionably. But is the picture amazingly rosy? Heavens to Betsy, no.

Ted Bauer


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