Let's Not Celebrate the 3.9% Unemployment Rate

Dwayne Harmon
May 6, 2018

Unemployment - which had stood at 4.1 percent since October 2017 - fell to 3.9 percent, according to Friday's report from the Bureau of Labor Statistics.

The USA Today said in a report that the Labor Department's announcement on Friday, May 4, confirmed that the US's unemployment scenario bettered in April from what it was in March (4.1 per cent) and also there was a job gain of 164,000, yet the news was "actually a mixed bag".

Mining employment increased by 8,000 jobs during the month, but employment was little changed in construction, retail and wholesale trade, transportation and warehousing, financial activities and government, the BLS said.

"Getting down to 3.9 is quite a marker", said Robert Frick, chief economist with Navy Federal Credit Union.

The overall job gains for February and March also were revised upward by a total of 30,000 jobs. Only the 1990s expansion was longer.

Much of the economy's durability is due, in fact, to the healthy job market.

The tightening labor market is a result of a simple reality: when the working age population is barely growing, even moderate job growth is enough to significantly tighten the labor market. That is more than Y-Y wage growth of roughly 2% that prevailed in Y's 2014 and 2015, when the unemployment rate was higher.

Frick believes unemployment will keep falling as businesses offer more attractive wages and benefits to entice Americans who have stopped looking for work.

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"People are creatures of habit", Ms. Barrera said. According to the Wall Street Journal, it has happened, "only a few times over the past 70 years - during the Korean War in the early 1950s, during the Vietnam War in the late 1960s and early 1970s, and during the tech boom of 2000". Nor did it when joblessness fell to 4.5 or even 4 percent.

However, franchise employment dropped 10,600 jobs in April, including a fall of 2,000 jobs in auto parts and dealers, ADP said. Companies continue to find ways to contain costs and many customers simply are unwilling to pay higher prices for goods and services.

The Fed has set an annual inflation target of 2%.

The report boosted the stock market: The Dow jumped nearly 300 points.

On other economic news, the final reading of US Consumer Sentiment Index came in at 98.8 in April, above market estimates, according to a survey released by the University of MI on Friday.

Hiring gains in April were broad.

Manufacturing added 24,000 jobs, up from a gain of 22,000 in March. With this news, the economy has averaged 200,000 new jobs per month in 2018, and the monthly average this year is higher than the last two years.

"We've seen great movement in jobs creation", she said. "The big thing to me was cracking 4", Trump told reporters. Continuing claims in the four-week average decreased by 15,500 to 1.83 million, all the lowest since the U.S. House of Representatives confirmed Gerald Ford as Vice President of the United States during the Nixon Administration.

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