For the past few months I’ve complained that the government’s employment statistics weren’t reflecting reality. They weren’t corroborated by other economic data and just seemed – well – trumped up.
It seems that reality has finally caught up with the Bureau of Labor Statistics (BLS), who yesterday released employment data for March that wasn’t just weak; it was downright bad. Every aspect of the report was bad. First of all, the headline number of 126,000 jobs created (from the establishment survey) was far below even the low end of estimates. And the employment level (from the household survey) was much worse, rising by only 34,000 jobs. The official unemployment rate held steady at 5.5%, but that was thanks only to the BLS’s “labor force vanishing act” trick of claiming that another 96,000 workers gave up looking for work.
And there was more bad news. Those inflated January and February employment estimates were revised downward by 69,000 jobs. And the average work week contracted by 0.1 hours, another sign of a weakening labor market. Aside from gains in business services, health care and retail, all other sectors of the economy (including manufacturing and construction) were flat or actually declined.
You can’t blame the weather for these weak figures. The weather was pretty benign for the last three weeks of March. And the labor dispute that nearly shut down ports on the west coast? That was resolved early in March. The only real explanation (corroborated by other economic data) is that the economy is slowing noticeably.
At the beginning of this year, amid all the euphoria over a “booming” economy, I predicted that growth would slow and stall in 2015. It’s starting to happen. I also predicted that, contrary to nearly-unanimous expectations of a rate hike by the Federal Reserve in June, they would not raise interest rates at all this year. This bad jobs report will surely put off any rate hike for at least a while longer. My point is that when you understand the role of worsening overpopulation in eroding per capita consumption, you understand that an economy propped up by stimulus and monetary expansion isn’t sustainable, especially when those stimuli have been removed.