The April unemployment numbers are in and employment rose by 165,000 jobs in April with the unemployment rate dropping to 7.5%, the lowest since December 2008. Revisions to the February and March job reports showed the best month since 2010.
Despite the slight uptick in the sluggish economy, Jared Bernstein, who served as chief economist and economic policy adviser to Vice President Biden, said there the report does not signal a full recovery.
“We are doing better than we thought we were, but in my view we are just doing okay. The unemployment rate is coming down and that’s good, but its coming down to slowly,” Bernstein said. “If you kind of average out over the past months we are adding around 160-170 thousand jobs a month, that’s averaging out all this monthly noise and that’s fast enough to very slowly bring the unemployment rate down.”
Peter Morici of Smith School of Business, is wary of the April report as he sees more trouble ahead. “The real problem is the $165 billion tax increase which is now starting to bite and I’m getting quite fearful that growth in the second quarter is going to be a lot slower,” Morici said. “This may be the best we get for a while, that bothers me.”
One other issue is that the participation rate is at a historic low, 63.3%. A lot of the failing participation rate comes from people between 50-65 who are not looking for work during this time. “With the participation rate that low it means as we start to create more jobs people are going to come back,” Morici said. “When they do come back it will be very difficult to bring the unemployment rate down, that is a considerable challenge.”