By: John Crudele
Yikes! Splat! Plop! Oy vey!
Job growth fell hard in April as the government’s employment numbers confirmed the disappointing reality already self-evident on nearly every Main Street across the US.
The economy was a loser this spring, and the statistical proof of this is catching up with reality.
The Labor Department on Friday announced that only 160,000 jobs were created last month. Put another way, most economists think that is barely enough to absorb even the people looking to enter the job market for the first time, much less give work to the 7.9 million Americans looking for a job.
April’s results were lower than the 208,000 jobs created in March, which was lower than the 233,000 jobs created in February.
You get the trend, here?
But as dispiriting as the 160,000 total is, there’s even, perhaps, a bigger problem — one that led me to believe this week that April jobs growth would exceed Wall Street’s forecast of 200,000.
That bigger problem is this: included in the 160,000 figure are 233,000 phantom jobs that Labor added to the mix.
The government each month regularly adds or subtracts phantom jobs, those it believes were created or destroyed — but can’t prove.
But 233,000 phantom jobs? In April? With the economy slowing as much as it has, as evidenced by the last two Gross Domestic Product reports?
What are they smoking at Labor?
And those phantom jobs are added before the seasonal adjustments.
Labor has never been able to tell me what effect its phantom jobs have on the headline seasonally adjusted number it publishes.
But even if only 40,000 of those 233,000 phantom jobs impact the headline number after seasonal adjustments, it means that April’s job growth was beyond miserable.
The April job figure changes a whole lot.
For one thing, it helps Donald Trump who wisely has made job growth and the economy key elements of his presidential campaign. And even if Hillary Clinton decides to mimic Trump’s appeal, it’s difficult for the party that controls the White House to distance itself from a bad economy.
The weak growth in April also makes life extremely difficult for Federal Reserve Chair Janet Yellen, who wants to raise interest rates but can’t find the right time — or the nerve — to do so.
I have been predicting a June rate hike, and that has been the consensus in the financial markets. The April jobs report makes such a move much more difficult.
Maybe even impossible.
With the presidential election coming Nov. 8, the Fed is running out of time — and opportunities — to attempt to push rates higher in 2016.
The May jobs report will be released on June 3, less than two weeks before a crucial Fed meeting. So there is a chance, however slight, that the Fed could raise rates.
After all, the May report will also be helped by generous phantom job additions.
Further down the line, there is only more trouble for the Fed and Democrats as Election Day nears.
After Labor Day, the phantom job assumptions turn mostly negative — making it harder to pad the real numbers.
If the fall jobs numbers are bad, the headlines the reports will create will amplify the pain on Main Street.
There are still 2.1 million long-term unemployed in the US and 6 million who are working part time because they can’t find a 40-hour a week job, Labor reported.
The unemployment rate, that useless number born of the crooked household survey, remained at 5 percent.
For the millions of Americans starving for work, they’d like to give this economy a swift kick in the butt.
Most will have to wait till Election Day to take matters into their own hands — only it won’t be the economy getting kicked.