US Economy Sprints Through the Finish Line

America received a belated birthday present, as the Bureau of Labor Statistics reported today that 224,000 jobs were added to the economy last month. This extended the longest continuous period of employment growth to match the now-longest period of economic expansion in U.S. history.

The headline unemployment rate marginally increased to 3.7 percent, and the comprehensive jobless rate—the highest that anyone can claim the “true” unemployment rate really is—slightly increased to 6.7 percent. But most economic statistics did not appreciably change from May’s jobs report.

This good news comes in spite of the recent signs of economic skittishness from President Trump’s trade wars. While some think tariffs stimulate American job growth by making products manufactured in foreign countries more expensive for domestic customers, they actually make all such products more expensive by insulating high-cost domestic producers from the consequences of their relatively-inefficient production technologies.

In the end, the total effect of a tariff depends on local demand as well as local supply. In the case of steel, demand has dried up in the face of rapid price increases, which then in turn has driven prices to fall more than 40 percent since last summer. Customers in the industries that use steel seem to be playing a waiting game for the tariffs to be resolved by “buying less and holding less” according to Todd Leebow, chief executive of Majestic Steel USA. In the meantime, this translates to less production and consumption—meaning slowed expansion—in the US economy.

The continued economic growth—despite the self-imposed headwinds created by trade wars—raises an interesting question: How much better would the economy perform without arbitrary restrictions?

Quick Statistics from the June 2019 BLS Jobs Report

Headline Employment Statistics

• Total nonfarm payroll employment increased by 224,000 jobs.
• The labor force participation rate increased by 0.1 percentage points to 62.9 percent.
• The headline unemployment rate (U-3) increased by 0.1 percentage points to 3.7 percent.

Other Unemployment Rates

• The mid- to long-term unemployment rate (15 weeks or longer; U-1) held steady at 1.3 percent.
• The discouraged worker unemployment rate (U-4) increased by 0.1 percentage points to 3.9 percent.
• The comprehensive jobless rate (U-5b) increased by 0.2 percentage points to 6.7 percent.

Deeper Unemployment Statistics

• The number of unemployed workers rose by 87,000 to 5.98 million.
• The number of people who say they want a job but were not actively seeking work increased by 277,000 to 5.32 million.
• Short-term unemployed workers (under 15 weeks) rose by 85,000 to 3.79 million.
• Long-term unemployed workers (27 weeks or longer) rose by 116,000 to 1.41 million, accounting for 23.7 percent of those who are unemployed.

Full-Time vs. Part-Time Employment Statistics

• The unemployment rate for those specifically seeking full-time work held steady at 3.5 percent.
• The unemployment rate for those specifically seeking part-time work rose by 0.2 percentage points to 4.4 percent.
• The number of people who wanted to work full time, but who could only find part-time work for economic reasons fell by 8,000 to 4.35 million, a drop of 8.2 percent over the last 12 months. The part-time workers who wanted full-time employment constituted 16.8 percent of all part-time workers.

Wages

• Average hourly earnings (for all private, nonfarm employees) rose by 3.1 percent over the previous 12 months.
• Average weekly earnings (for all private, nonfarm employees) rose by 2.8 percent over the previous 12 months.

Photo Credit: Steven Lelham/Unsplash.