Economist Herbert Stein famously observed, “If something cannot continue, it will stop.” Given other readings on the economy, the rapid growth in jobs that was reported by the Bureau of Labor Statistics (BLS) for 4Q2015 and 1Q2016 could not continue. So, in April, it stopped.
Friday’s BLS “Employment Situation” report was terrible. FTE* employment fell by 296,000, and America moved 376,000 FTE jobs farther away from full employment, bringing our total FTE jobs shortfall up to 12.9 million.
The labor force participation (LFP) rate plunged to 62.82%, erasing all of the improvement since June 2014. Falling LFP has been one of the most distinctive features of the Obama economy, and April’s LFP was down by 4.3 percentage points from its April 2000 peak. This is equivalent to 11.4 million Americans giving up finding jobs.
The Bureau of Economic Analysis (BEA) recently reported that real GDP (RGDP) grew at an annualized rate of only 0.54% during 1Q2016. And, given a number of physical measures of the economy (e.g., industrial production, factory orders, imports and exports), even this number seems high. Accordingly, it was unrealistic to expect that the number of FTE jobs could continue to rise at the 3.65% annual rate reported for 1Q2016 (or even the 2.95% reported for 4Q2015, when RGDP growth was 1.38%)
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