The new jobs report was a mixed bag of both positive and negative signs for the economy. The April jobs report showed the economy added 288,000 jobs, a number that exceeded expectations. However, not all news was good news: the unemployment rate shrunk from 6.7% to 6.3%, the lowest it has been since October 2008, but that was mostly caused by people dropping out of the labor force. Democrats are viewing the results as a positive sign that the economy is not taking a nose-dive. Republicans view the results as a negative sign that people are losing hope in a troubled economy.
The latest jobs report has a clear and comforting message for the White House and nervous Democrats: the economy is not tanking again.
The April report, showing a bigger than expected gain of 288,000 jobs, should quiet fears of another spring slowdown and revive hopes for faster growth the rest of this year.
Democrats have long been counting on an improving economy to help them in an otherwise challenging midterm election season. And it now looks like they could get it. The better than anticipated number was especially heartening given the recent report showing economic growth all but stalled in the first quarter of the year.
Now all that recent weakness looks like it really was the result of a frigid winter stalling everything from home-building to mall shopping.
The job gains were widespread across industries, suggesting employers were catching up on hiring they postponed over the cold winter.
But the report was not all good news.
The jobless rate dropped from 6.7 percent to 6.3 percent — the lowest rate since October 2008 – largely because the size of the labor force shrunk by 806,000 in April. No one knows exactly why the labor force keeps shrinking – it now sits at 62.8 percent, a 35-year low. But it at least in part reflects some people giving up on ever finding a job.
There were other weaknesses in the report. Average hourly earnings were flat at $24.31 and are up only 1.9 percent over the past year, meaning workers have little extra money in their pockets to spend and drive overall economic growth.
Stagnant wages across the middle of the economy will be a big issue in the midterm election with Democrats pushing for a bump in the minimum wage and Republicans arguing for a whole new set of economic policies to boost faster job creation and higher pay.
Meanwhile, it is too soon to say if the strong April jobs report means the economy will really start heating up heading into the second half of the year. Many economists believe it will do exactly that, with small businesses finally spending more on equipment and hiring.