International Forecaster Weekly

JOBS UP BY 428,000 IN APRIL - But the Level of Returning Jobs Greatly Differs Across Industries

Friday’s latest government jobs report shows two ongoing trends:

First, with employers adding 428,000 in April, the economic rebound from the brutal pandemic seems to be holding together.

And second, as shown in the chart above, the level of the job rebound since the early days of the pandemic continues to depend on what industry you work in.

On the one hand, April’s seasonally adjusted figures are virtually the same as March’s, according to the Labor Department, with the growth in jobs broad-based across every major industry.

Guest Writer | May 11, 2022

By Dave Allen for Discount Gold & Silver

Friday’s latest government jobs report shows two ongoing trends:

First, with employers adding 428,000 in April, the economic rebound from the brutal pandemic seems to be holding together.

And second, as shown in the chart above, the level of the job rebound since the early days of the pandemic continues to depend on what industry you work in.

On the one hand, April’s seasonally adjusted figures are virtually the same as March’s, according to the Labor Department, with the growth in jobs broad-based across every major industry.

The woefully underreported headline unemployment rate remained at 3.6% – just a tad above its dubious level before the pandemic, when it was the lowest in five decades.

A broader, more accurate and thus more credible measure – the U-6 jobless rate – increased slightly in April to 7.0% from 6.9% in March, almost twice as high as the headline metric.

The U-6 rate includes the U-3 rate plus discouraged workers, persons marginally attached to the workforce, and those employed part-time for economic reasons.

Jobs Growth Differs Across Industries

One of the big challenges of a highly competitive labor market, like today’s, for employers – a shortage of available workers – persists as well. In fact, the report showed a decline of 363,000 in the overall labor force.

The economy has regained almost 95% of the 22 million jobs lost at the height of pandemic-related lockdowns two years ago. 

But the number of jobs added back to the economy since February 2020 varies widely among industries.

For example, Professional and Business Services have added back 738,000 jobs. Transportation and Warehousing have added back 674,000, and Retail Trade has added 284,000.

At the bottom of this totem pole, Leisure and Hospitality businesses are still down about 1 million jobs. Federal, State and Local Government jobs are down 690,000, and Education and Health Services are down 409,000.

Yes, the economic rebound – as indicated by jobs – is broad but it’s also unequal across industries.

And the labor supply has not kept up with a record wave of job openings as businesses have tried to expand to match consumers’ continuing demand: There are now 1.9 job openings for every unemployed worker.

That hiring stampede has driven up private, nonfarm wages – with employers largely passing on those expenses.

Job Growth Lagging Behind Inflation

And that’s been helping to fuel the inflation that Americans have cited as their #1 economic concern. 

In that respect, Friday’s report showed an easing in the acceleration of average hourly earnings, which increased 0.3% in April from the month before, after a 0.5% gain in March.

The April and March annualized average earnings increased 5.5% and 5.6%, respectively.

President Biden and Democratic members of Congress pointed to the data as “the strongest job creation economy in modern times” – a message they want to send ahead of the congressional elections in November.

But a record share of Americans now rate inflation as the biggest financial problems facing their households, according to a Gallup Poll in April. 

The survey found that 46% of households rated their personal finances positively, down from 57% last year, when most households were freshly benefiting from rounds of pandemic financial assistance.

The April survey shows average hourly earnings 5.5% higher than a year earlier, but with inflation (as measured by the PCE) running at 6.6% over the same period, workers are being left with less purchasing power.

Steep price increases have gone on longer than the Federal Reserve expected, prolonged in part by the price pressures stemming from Putin's invasion and lockdowns in China.

As a result, the Fed announced last week that it was raising its benchmark interest rate by another half a percentage point – after increasing it by 0.25% in March — and suggested that more increases are coming and soon. 

The goal of the Fed is to slow consumer demand and business expansion by making money more expensive to borrow.

They hope, in turn, that will slow down hiring and thus decrease the pace of higher wages.

Powell Says the Fed Can Do It

Fed chair Jerome Powell expressed confidence in his latest press conference that the Fed can steer the economy back into balance.

It’s a view that some economists, like Oxford Economics’ Oren Klachkin, share.

He believes the economy, which has added two million jobs so far in 2022, will add another two million by the end of the year.

World News Era’s Cathy Biank points to the durability of household finances as the major force behind business expansion and job growth, lifted by the pandemic relief spending of the past two years. 

Savings accumulated during the pandemic, though definitely tilted toward the rich, remain in the trillions. 

And according to too big to fail Bank of America, households with an annual income of less than $50,000 have about twice the savings they did before the pandemic.

Interestingly, a growing number of economists see the country at or near “full” employment – where mostly all Americans who are able and willing to work are doing so.

If that were true, why does the government maintain the U-6 unemployment rate?

The McKinsey consulting firm says in a recent report that the “untapped” labor pool – those who are not in the work force, but who could return given the right circumstances (like good pay and relief from their child and parental caregiving obligations) – could be as much as 23 million people.

That’s a huge discrepancy.

Right now, even if the labor force returned fully to its pre-pandemic level of 152.5 million jobs, there still wouldn’t be enough workers to meet employers’ needs.

But economist Michelle Meyer at Mastercard says, “It’s not about getting supply to where it was pre-pandemic. It’s about getting supply to meet this very high level of demand.”

Globally, gold ETFs registered healthy net inflows of $3 billion in April – the strongest since February 2016, according to the World Gold Council’s latest monthly report.

            Although we strongly prefer ownership of physical gold and silver (coins and bars), it’s the 4th consecutive month of ETF inflows and “maintain[s] the momentum of flight-to-quality flows” we’ve seen so far this year. 

            Overall, the WGC says the gold market has seen “a solid start” to 2022, despite the last few weeks. 

            Gold demand (excluding over the counter) was 34% higher year-over-year in the 1st quarter, driven by the strong ETF inflows.

            Total demand increased to 1,234 tons in the 1st quarter – the highest since the 4thquarter of 2018. 

            So, why isn’t gold soaring in price? We don’t know, but we’re confident that as purchasing power continues to fall, it will.