Upon Further Review, April Jobs Report Even Worse
One problem is that the pace of job creation is slowing. The number of new jobs has fallen from 259,000 in February to 154,000 in March to 115,000 in April. These figures reveal not only a weak level of job growth, but also a troubling direction for the months ahead.
The second problem is a little less obvious, but it helps explain why the drop in the unemployment rate is less of a positive development than meets the eye. The unemployment rate is a function of how many people are looking for work, compared to the total number of people participating in the labor force. What taints the redution in the unemployment rate a little is that an increasing portion of the adult population is no longer participating in the labor force.
In April, the labor participation rate fell to 63.6 percent, the lowest in more than 30 years. Some chalk this up to the hopelessness of the recent job market, but this figure has been declining since the year 2000. That may be an indication of when the economy first began to decline, or it may be a function of an aging baby boomer generation. Whatever the cause, though, a declining labor force is not conducive to strong economic growth.