The economic report for May was released on Friday and it was rather underwhelming, suggesting that the economy is still sluggish and there is a serious need for pro-growth policies.
Below are five important takeaways from the May economic report.
1. The economy only added 138,000 jobs in May, far lower than expected.
The expectation was around 185,000 jobs. This is barely enough job growth to keep up with population growth.
2. The jobs numbers from March and April were revised downward.
According to Zero Hedge:
The change in total payrolls for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported. This means that over the past 3 months, job gains have averaged 121,000 per month, a far cry from the 181,000 average jobs added over the past 12 months.
3. The labor participation rate declined from 62.9% to 62.7% in May, bringing the total number of Americans out of the labor force to 94,983,000.
The record number of Americans out of the labor force was 95,102,000 in December, according to CNS News, which renders the decline of the U3 unemployment rate from 4.4% to 4.3% as not being a positive development.
4. Average hourly wage growth only increased by 0.2%, keeping the year-on-year increase in wage growth at 2.5%.
The reason for this is because the job gains seemed to come in job sectors with lower wages. The 2.5% figure is the lowest since March 2016, suggesting that the economy is flat. Strong recoveries typically have wage growth reaching 3% or higher.
5. The economy won’t go into a full recovery until pro-growth policies are implemented.
Implementing tax reform would certainly help, but the biggest impediments to growth are the debt and Obamacare.