Last week’s jobs report was full of surprises, with employers adding only 98,000 jobs in March, far less than expectations of 180,000. Complicating this picture, the unemployment rate unexpectedly fell to 4.5% from 4.7% and has now reached the Federal Reserve’s median target for the end of 2017. Finally, the labor participation rate stood steady at 63.0%, yet everyone expects this number to increase as wage growth accelerates, pulling more people back into employment. Studies have shown that prime age women are increasingly entering the labor force as the economic cycle continues to gain steam.
March economic numbers were messy, yet the longer-term trends are unmistakably positive. Though the post-crisis economic recovery has been frustratingly slow, it is getting the job done. The top line numbers are good and the unemployed rate is now the lowest since 2007 – which as we all remember was a very good time.
Even with good top line numbers there is still room for improvement. The U-6 underemployment rate dropped to 8.9%, but is still above the 7.9% observed before the financial crisis. The U-6 rate is, in our opinion, an important gauge of unemployment since it measures the total unemployed, plus those who are not looking but are available and want a job, plus those who are working part-time and cannot find a full-time job.
Rosie is rolling up her sleeves, and it looks like we have the chance to get back down to pre-crisis levels of unemployment. We Can Do It!
Sources: Bloomberg, The Financial Times, The Federal Reserve