The U.S. Bureau of Labor Statistics reports that 195,000 jobs were added last month — significantly better than the consensus forecast of economists (165,000). Another 70,000 jobs were added in March and April thanks to revisions. While the news isn’t bad, we shouldn’t be calling it “good,” either. Some perspective is in order.
Remember above all else this analysis from the Federal Reserve Bank of Chicago, which looks at the impact of aging and slowing population growth to determine how many jobs are needed to return to full employment. These economists calculate that it would take four more years of job gains at the current pace of 195,000 per month to completely close the gap that began opening at the end of 2007.
In other words, the U.S. is on track for a lost decade under the most optimistic assumptions. It will take even longer to return to full employment if the Chicago Fed’s demographic analysis turns out to be incorrect, or if the present rate of job creation can’t be sustained over the next several years.