U.S. Job Market Could Be Taking a Wrong Turn
The U.S. job market could be taking a turn for the worse. Looking at this, it must be questioned if a recession is becoming imminent for the U.S. economy. Investors, be very careful. Don’t get lured by false optimism.
On April 6, the U.S. Bureau of Labor Statistics (BLS) reported that, in March 2018, 103,00 jobs were added in the U.S. economy. The job market report also said that unemployment in the U.S. was 4.1%. (Source: “Employment Situation Summary,” Bureau of Labor Statistics, April 6, 2018.)
Before going into further detail, know that the previous month’s job market numbers were revised lower; the combined job numbers for January and February were overstated by 50,000.
Here’s the thing: when we see the overall trend in the job market numbers, they are worrisome. Remember to always look at the big picture. Focusing too much on monthly figures could be misleading, especially since these figures often get revised.
Overall, the number of jobs added to the U.S. economy is dwindling.
Consider that it wasn’t too long ago that the average job gain per month was over 200,000 jobs. In 2015, for example, the average for the whole year was 226,000 jobs per month. This is not the case anymore. If we look at the past 12 months (between March 2017 and March 2018), the average monthly job gain was 180,000.
One could even say that the U.S. economy is adding 46,000 fewer jobs per month than it did in 2015. Obviously, this is not good.
Part-Time Workers Prevail, Number of Marginally Attached Workers Remains Staggering
Digging a little deeper…
There are certain parts of the U.S. job market statistics that say conditions are still distorted.
Pay attention to the number of Americans working part-time for economic reasons. This is essentially people who would work full-time, but are only working part-time because their hours have been reduced.
In March, five million Americans fell in this category. This number has improved over the last few years, but remains above what it was before the recession of 2007–2009.
Look closely at those who are marginally attached to the U.S. labor force, too. Who are these individuals? They are individuals not counted in the labor force, but they were available for work, and looked for employment over the past 12 months.
In March, 1.5 million Americans were deemed marginally attached. The worst part is that this figure hasn’t improved much over the last year. At its core, this means that Americans may be getting fed up with looking for work.
What Is the Job Market Saying About the U.S. Economy?
Dear reader, understand that U.S. job market figures are a leading indicator for the U.S. economy. If job numbers tumble, it tells us that businesses aren’t optimistic and aren’t hiring; economic growth may be stalling.
Also, know that if the job market faces headwinds, it could directly impact consumption in the United States. If Americans are not getting hired or getting better jobs, do you really think they will go out and spend? It’s highly unlikely.
I reiterate what I said before: don’t get too complacent. What the U.S. job market is saying shouldn’t be ignored whatsoever.