Despite Record Profits, April Jobs Report Dismal With Only 69,000 Jobs Added

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CNBC has the details…

As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions and the jobless rate rose for the first time in nearly a year.

Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.

The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.

Long-term unemployment also took a sharp upturn, with the number of those out of work for 27 weeks or more jumping from 5.1 million to 5.4 million. The average duration of unemployment moved from 39.1 weeks to 39.7 weeks.

What’s to blame?

Well, for one thing the government stimulus is no more. It’s pretty clear at this point that we needed more money to prime the pump, especially given the wildly inaccurate numbers from Q4 2008. First it was a decline of 3.8%. That’s why the stimulus was set sub-trillion dollars. What was the real number? 3 years later it was discovered that the GDP had fallen 8.9% in that quarter. So we were working with faulty numbers. Still, that ship has sailed.

Second, the business sector simply isn’t willing to invest enough to fill the gap, even with record profits, so the economy is stalling out.

Here’s a quick graph of corporate profits (h/t: Carpe Diem)

Long story short…let’s hope that corporations start spending because if they don’t…we’re screwed.

  • Calmoderate

    Government stimulus spending did seem to have a generally positive impact, but once the flow of money stopped it seems that most (or all) of the momentum dissipated. Could that fade-out be a side-effect of higher debt attached to stimulus spending, businesses who have become more efficient and requiring fewer workers, the overhang of the housing bust, stagnant (maybe decreasing in real terms) income increases for workers and/or some other factor(s)?

    I have not heard a rationale from anyone for why priming the pump via federal stimulus spending would necessarily lead to a self-sustaining recovery. In retrospect, it seems that that was just a hope based on past experience. Unfortunately, past experience came from past circumstance. maybe circumstance has changed. If so, we may be in a new, less forgiving era where self-sustaining growth is going to be much harder to attain. I can’t help but think that ruthless, relentless global economic competition and an intractably negative balance of trade are part of whatever malaise we are in at the moment. And, maybe the failure of two party politics is undermining confidence in U.S. prospects, which dampens economic activity somewhat.

    Something feels very wrong, but I just can’t put my finger on exactly what it is.