June jobs report rebounds

Steve Benen has the June jobs report. Job growth picks up steam as spring turns to summer:

Monthly job growth was a little underwhelming as 2017 got underway, leading to questions about when we might see more robust numbers. Apparently, we now have an answer.

The Bureau of Labor Statistics reported this morning that the U.S. economy added 222,000 jobs in June, which is a very healthy total. The unemployment rate, meanwhile, inched higher to 4.4%.

As for the revisions, the totals for April and May were both revised up, and combined they show a net gain of about 47,000 jobs.

Above you’ll find the chart I run every month, showing monthly job losses since the start of the Great Recession.

Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

Daily Kos adds:

June marked the 81st consecutive month of overall job growth. A separate survey placed the headline unemployment rate—which the bureau labels U3—at 4.4 percent, an historically low rate. The last time the unemployment rate was at this level was 10 years ago, in May 2007. The lowest the rate has been in the past quarter-century was 3.8 percent in April 2000.

So, once again, the Trump regime has benefited from the economy it inherited from the Obama era, a far cry from the economy inherited from the Bush administration by President Obama when he stepped into the Oval Office in January 2009.

But there has been a drop in gains over 2014-2016. In those three years, the average monthly jobs gain was 250,000, 226,000, and 187,000, respectively. For the first half of this year, the average monthly gain has been 180,000. Nonetheless, what had appeared to be a significant deceleration in hiring in March, April and May turns out mostly to have been statistical noise.

* * *

Between February 2008 and December 2009, the Great Recession caused a net loss of 8.8 million jobs. Since then, the economy has made a net gain of 12.1 million new jobs.

Wages rose, but only marginally. Since last June, they’ve gone up 63 cents an hour, a 2.5 percent year-over-year increase against an annual inflation rate of 1.9 percent. In other words, workers are just getting by judged by this metric.

Neil Irwin recently wrote at The Upshot at the New York Times, Confidence Boomed After the Election. The Economy Hasn’t.

After Donald J. Trump won the presidential election, Americans’ optimism about the economic future soared. But midway through the year, that optimism has not translated into concrete economic gains.

This seeming contradiction exposes a reality about the role of psychology in economics — or more specifically, how psychology is connected only loosely to actual growth. It will take more than feelings to fix the sluggishness that has been evident in the United States and other major economies for years. Confidence isn’t some magic elixir for the economy: Businesses will hire and invest only when they see concrete evidence of demand for their products, and consumers intensify their spending only when their incomes justify it.

The sharp rise in economic optimism after the election came through no matter how the question was asked or who answered, whether the survey was intended to capture consumer confidence or consumer comfort or consumer sentiment. It was true in surveys of small-business owners and of C.E.O.s of some of the biggest companies in the world. And the rise during the winter months in these surveys has mostly been sustained in the months since.

But the economy is plodding along at the same modest rate it has for the last eight years nonetheless — at least when you look at “hard” data around economic activity instead of “soft” data like surveys, as analysts put it.

President Trump said on Twitter on Sunday that the stock market was at an “all-time high” and that unemployment was at its lowest level in years, both of which are true (he added that wages would start going up, which is certainly possible).

But in overall measures of economic activity, the expansion looks much as it has for years, with steady growth of around 2 percent. The Trump economy so far looks an awful lot like the Obama economy.

Note: Donald Trump promised to “return to 4 percent annual economic growth.” The 4% GDP promise is one that Trump has made before, and is the official promise of the White House and the president. Trump is officially making an economic promise that will be nearly impossible to keep.

For all of business executives’ apparent enthusiasm, the nation is adding jobs more slowly in 2017 than it did in 2016, and investment spending by businesses is growing modestly; new orders for capital goods are up only 0.7 percent so far in 2017.

Consumers’ spending was 2.7 percent higher in the first four months this year than in the same period of 2016, adjusted for inflation — which is slower than the 3.2 percent year-over-year gain at the end of 2016.

And while the stock market has been surging and the Federal Reserve has raised short-term interest rates, long-term Treasury bond yields remain very low, suggesting that traders do not buy the idea that growth is poised to accelerate. A falling dollar suggests currency markets see improving prospects in Europe and elsewhere.

There is no sign a recession is brewing, but neither is there evidence for the kind of boom you might expect if you believe that confidence is a crucial driver of economic growth.

Irwin goes into more detail about the relative value of consumer confidence surveys in economic predictions. If you want to get deep into the weeds of economic theory, give it a read.

Irwin concludes:

One clue as to which precedent applies here is in the partisan breakdown in sentiment surveys. Instead of an across-the-board improvement in confidence, it appears that Republicans became sharply more confident while Democrats became somewhat less so. That implies that the postelection confidence surge was about conservatives feeling more giddy about their side winning than about the broad mass of Americans picking up on improving economic fundamentals not yet evident in the data.

The Trump administration’s promises of major tax cuts, infrastructure spending and pro-growth regulatory policy have been slow in coming, but could conceivably change that over time.

But history shows that confidence alone won’t cut it.