Decline In Labor Force Participation Reflects Demographics; May Not Be As Bad As Reported

Recession Numbers Second Consecutive Month Yesterday I was asked if the services ISM changed my view about the US being in recession. I responded that I wanted to see today's job report first. Well I have seen it and the report is nothing short of a certified disaster. Yes, Virginia, based on the household survey, and manufacturing reports, the regional Fed surveys the US is in recession.

The BLS reports non-farm payroll jobs increased by only 88,000 in March, while the unemployment level fell 0.1% to 7.6%. Private payrolls increased only 95,000. Average hourly earnings were unchanged, while the average workweek increased a single tick to 34.6 hours. The internal of the report are uniformly bad. The labor force participation rate fell to 63.3%, the lowest since May, 1979. 496,000 people left the labor force since last month, as it fell from 155,524,000 to 155,028,000.

ADP got the headline job number correct, I certainly didn't. However, one look beneath the surface shows this was actually an anemic jobs report. Unemployment was up, and the household survey shows a loss of 195,000 jobs. The household numbers are even worse because part-time employment went up. Jobs Report at a Glance Here is an overview of today's release.

Quick Notes About the Unemployment Rate

Quick Notes About the Unemployment Rate

The labor force participation rate fell to 63.3 percent in March.  This is the lowest level since 1979. Many are quick to attribute this falling rate due to workers leaving the labor force because they're so discouraged by the poor job market. But this is only a small part of the story.

Initial Reaction The establishment report of +146,000 jobs was about what most expected. However, beneath the surface, this report looks grim. The household survey shows a loss of 122,000 jobs. The unemployment rate dropped by .2% because the labor force fell by 350,000 and those "not in the labor force" rose by a whopping 542,000. Thus, we are back to the previous 2012 pattern of witnessing unemployment rate drop largely because of a massive increase of those "not" in the labor force.