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Posted on Apr 30, 2014

Why May's Payroll Report Is Only Kind Of Good News

According to the non-farm payroll report released on May 2nd, 2014, it would seem that there is nothing but fantastic news to report about the U.S. economy. At the highest level, the economy added 288,000 jobs in April 2014, crushing the consensus expectations of 218,000. Even more granularly:

  • The unemployment rate went down to 6.3%, the lowest number in over 5 years
  • Long-term unemployment dropped by 287,000 people down to 3.5 million total
  • Private payrolls were up 273,000, also greatly exceeding the consensus estimates

However, there are two major reasons not to read too much into the data.

  1. Labor force participation actually went down again! The participation rate fell from 63.2% to 62.8%. What does this mean? Basically, people are increasingly deciding to stop looking for jobs. The job market is so difficult out there that more and more people are simply opting out. As this number continues to rise, it's a wake up call to everyone that not everyone is benefiting from this current economic growth.
  2. Although more and more jobs are being added, workers are as discontent as ever. So people may have jobs, but they're not happy doing them. Gallup recently reported that 70% of workers are disengaged at work. The takeaway is that we may be putting more people to work, but they aren't actually happy with their jobs.

Hopefully we can reverse these troubling trends soon.

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