Despite jobs report, warning signs abound

May 10 23:59 2015

Economists got it right last month: 223,000 jobs were added to the economy in April, in line with the 228,000 expected, while the unemployment rate fell to 5.4%. Wages even picked up slightly, logging 2.2% growth. All in all, not bad. But not great, either. And considering the fundamental challenges to the economy, it’s unclear whether any momentum in the job market will prove sustainable.US-unemployment-jobs-fair-007

Despite this modest improvement over last month’s jobs numbers, warning signs abound. Even the Fed is sounding the alarm. The world economy faces massive challenges — and one in-line jobs report is not enough to change that. Some investors blame the weather and will point to this month’s employment report as proof that we’re on the mend. Our nation’s economic malaise stems from a larger fundamental problem — problem that neither President Obama nor Yellen seem capable of fixing: a lack of demand. Today’s weak jobs report coupled with a poor report on the health of the U.S. economy during the first three months of the year confirms what many already believed — the U.S. economy is stuck in doldrums.

Without a vibrant consumer to buy their goods and services, U.S. companies are hesitant to invest in the future. As such, they don’t hire, and they don’t build. The administration will tout the hundreds of thousands of jobs the economy has added this year. Let’s not kid ourselves. These are lousy, low-paying jobs, and they haven’t grown our economy. Meanwhile, a strong U.S. dollar contributes to our economic woes by making U.S. goods increasingly expensive to overseas buyers, which reduces international demand for our products.

If you combine our problems at home with the unraveling of the eurozone, economic challenges in Asia and a decline in commodity prices that hurts developing nations, many fear we have the recipe for a potential worldwide recession the likes of which we haven’t seen since the early 1930s.