A mixed economic picture
There's something for both optimists and pessimists in the latest economic news.
The U.S. Labor Department last week released national employment figures that tell two different stories — one good and the other bad.
Taken together, they raise more questions than they answer about this nation's lagging economic recovery and possible prospects for improvement.
The good news is that the economy generated 288,000 new jobs in April and that the national unemployment rate fell to 6.3 percent, the lowest rate since 2008. Even more heartening is that the economy has produced an average of nearly 240,000 new jobs for the past three months, a solid increase over job growth numbers in 2013 that averaged about 197,000 new jobs per month.
But job numbers have to be seen in the proper context to determine if the economic ship of state is headed in the right direction.
Economists estimate that economy must produce a minimum of 125,000 new jobs per month just to keep up with young workers who are entering the work force.
At the same time, however, there was undeniable bad news — the labor participation rate fell to 62.8 percent, a three-decade low.
The decline resulted from roughly 800,000 people who dropped out of the labor force in April on top of roughly 500,000 who dropped out the month before. In other words, over the past two months roughly 1.3 million have — for a variety of reasons — given up on looking for a job.
The labor force is defined as the total number of those people working or actively seeking work. The labor force participation rate peaked at 67.2 percent in 2000 and stood at 66 percent at the start of the recession in December 2007. Statistically speaking, the recession has ended, but the anemic recovery has had a brutal effect on those who lost jobs.
The Brookings Institution reports that, "As of February (2014), our nation faces a jobs gap of 11.4 million jobs, 5.2 million from jobs lost since 2007, and another 6.1 million that should have been created in the absence of the recession." If the economy added 200,000 jobs a month, it would take until February 2020 to eliminate the jobs gap. At a rate of 321,000 new jobs per months, it would take until April 2016 to eliminate it.
Those, however, are bloodless numbers. People who want a job and can't find one are real flesh and blood, and they're hurting. It's good that new job growth is headed in the right direction, but the jury is still out on whether this move is permanent or temporary.
After all, in the first quarter the U.S. economy grew just one-tenth of 1 percent. That's a glacial pace that raises the specter of the economy falling back into recession, defined as negative economic growth for two consecutive quarters.
Although the economy is in many ways a mystery, economists have attributed the weak economic growth to miserable winter weather that kept many people home and out of the marketplace. With warm weather now here, they're optimist about better times ahead.
Obviously, the national economy is better than it was, but not nearly as good as it needs to be for America and its people to thrive.