Friday we heard about the labor market. And the news wasn’t good.
Payroll employment fell last month by about 50 thousand workers. That’s in-line with the view that we’re in a modest economic slowdown, not a recession. But the unemployment rate rose by half a percent, the largest increase in decades. What gives?
When I first saw that number, my initial reaction was panic. What have I gotten wrong, I thought. But when I looked into the details, I became more curious. Unemployment is job-seekers divided by the labor force. The payroll number was better than expected. So what made the number of job seekers grow so much?
One answer is in the time of year that we’re in right now. Millions of kids are getting out of school for the summer. With many vacation plans on hold, these teenagers and young adults are now entering the workforce. And they get counted, just like laid-off Ford workers are.
Indeed, the numbers for young people did shoot up last month. So while there is broad weakness in the economy, the report reflects more of a spring rush than the summertime blues.
Douglas R. Tengdin, CFA
Chief Investment Officer
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