On Friday, from the U.S. Bureau of Labor Statistics, we learned that the U.S. economy added 271,000 jobs in October and the official unemployment rate is now down to five percent, its lowest level since 2008. The average analyst expectation was for 180,000 jobs to be created last month; hence, on the surface, it was a strong jobs market report. (Source: U.S. Bureau of Labor Statistics, November 6, 2015.)
But when we take a closer look, the jobs market numbers for October tell another story.
Long-Term U.S. Jobs Market Remains Week
In the first 10 months of 2015, we have seen an average of 206,000 jobs added each month in the U.S. economy. In the first 10 months of 2014, we were averaging 236,000 jobs created each month. (Source: Federal Reserve Bank of St. Louis, last accessed November 6, 2015). This year’s jobs market is really performing 13% worse than last year.
Next, when we look at the underemployment rate, which includes people who have given up looking for work and those who have part-time jobs only because they can’t find full-time jobs, it remains stubbornly high at around 10%.
Poor Jobs Market Hurting Retail Sales
Please look at the chart below. It plots the year-over-year changes in the U.S. jobs market and in U.S. retail sales, excluding food items.
From the chart, we easily see that the jobs market has remained stagnant since the so-called recovery in the U.S. economy began. In light of the poor jobs market, retail sales growth has been consistently deteriorating. Is it any wonder 45 million Americans are using some form of food stamps—a number that hasn’t come down in years?
The U.S. jobs market continues to struggle and it is impacting consumer spending, as the chart above clearly shows. With job growth this year sitting 13% below last year’s job growth, I remain pessimistic about the U.S. economy going into 2016.