April's employment report was disappointing, with only 115,000 jobs added vs. the consensus for 160,000. Upward revisions to the prior two months and a slight dip in the unemployment rate take some sting out of the headline disappointment but the labor participation rate fell to 63.6%, its lowest level since 1981.
In a nutshell, the April jobs data confirms the trend evident in most recent economic reports: The economy is growing but not fast enough for the roughly 12.5 million Americans who are under- or unemployed and the millions more who are struggling to keep afloat. (See: April Jobs Report: More of the Same)
Two numbers from today's unemployment rate speak to these trends:
- U6, the so-called real unemployment rate was unchanged at 14.5% in April.
- Average hourly earnings were flat in April and up just 1.8% in the past 12 months, below the rate of inflation -- meaning even Americans with jobs are a risk of falling behind (CPI is up 2.7% in the past year).
In the accompanying video, I discuss the economic and political implications of the jobs report with Austan Goolsbee, a professor at the University of Chicago Booth School of Business and former chairman of the President's Council of Economic Advisers.
"The most important thing," Goolsbee says, is "to put the focus on getting the growth rate back up in the country."
Easier said than done and, of course, the big question is 'how?'
Goolsbee, for one, does not believe more government stimulus is the answer. But neither does he advocate austerity, which he says has been "a complete failure" in Europe. "I think the best policy now is anything that encourages the private sector to start the recovery, not straight government spending stimulus."
As a member of President Obama's economics team, Goolsbee sided with (most notably) Larry Summers in advocating for less vs. more government spending to combat the downturn in 2009, according to accounts such as Ron Suskind's Confidence Men and Noam Scheiber's The Escape Artists.
Today, Goolsbee remains skeptical about the usefulness of more government spending to give the economy another boost.
"Even if they could agree on it, I sort of think we're past the point where what Washington's going to do will make a big difference -- except in the 'messing it up' sense," he says. "If we get closer to the election and they can't agree to avoid the huge tax increase and giant spending cuts at the end of the year, I do think people are going to start to freak out a little bit."
The Dow was down more than 100 points in recent trading but the President's campaign managers probably have more to freak out about than market participants.
"If the growth rate was 3% or above you'd probably see significant improvement in the labor market and the President's campaign would be feeling good," Goolsbee says. "And if the growth rate is below 2%, it will probably be an uphill struggle for them."
At this point, the economy is growing closer to 2% and heading in the wrong direction -- at least as far as the President's reelection hopes are concerned.
"If the private sector continues to grow at a rapid rate and there was some slowdown in the shrinkage of the housing sector and government sector, you'd probably see the job market improve," Goolsbee says. "But if not, it's going to kind of bump around in this 'getting better but not very quickly' and that's a tough slog."
A tough slog, that is, for Americans looking for work and any politician looking to keep their job.