This morning's employment report left a lot of people scratching their heads. The percentage of those who are without jobs jumped 1/2 percentage point from 5.0 percent, in April, to 5.5 percent, for last month. This jump was the greatest such jump in 33 years. Unemployment is now at a four-year high (See Full Story).
The perplexing fact is that new building (for construction jobs), retail sales, domestic output and other economic statistics were on a slight rise and gave no indication of such a jump in unemployment. Even the weekly jobless claim numbers were steady and well under 400,000 for those claiming initial (new) jobless benefits; which is contrary to this sudden jump of 861,000 freshly unemployed workers in this morning's report. It is as if 861,000 newly unemployed people suddenly appeared, without filing unemployment claims, and went directly to looking for jobs in the month of May!
I personally think this number is a single month's aberration. Either that or the Labor Department has been asleep at the wheel over the last 3 month's with unemployment moving from 5.1 percent in February to 5.0 percent and, then, this sudden jump to 5.5 percent in May. There is just too much data that, when put all together, paints an entirely different picture about the economy. In fact, the picture we have gotten, up until now, is one of a slowed economy that was somewhat rebounding and with no dip into recession territory. If this morning number isn't somehow a skewed number, then it is giving us the look and the feel of something different; a true recession.
Certainly, one should never base an opinion on one single fact. Probably, a linear regressed number of this rise in unemployment (over the last 6 months) would give us an unemployment percentage of about 5.1 to 5.2 percent and not the 5.5 percent (as a raw number). However, this number can't be ignored. One can only wait until next month to see if there is any real "truth" in what it is saying. It wouldn't be the first time, though, that a Federal agency got it all wrong. Now, would it?
Graphic by Cranky George