Strong momentum in the jobs market deserves respect, rather than short shrift

The monthly U.S. jobs report is the Rodney Dangerfield of economic statistics. It gets little respect yet has a big and important audience.

In good times, employment data is derided as “a lagging indicator,” as if because it captures what the job market was, it is to be dismissed by the declining stock market. In bad times, the job information either confirms the difficult times, or is rejected as obsolete.

The May jobs report is likely to be discounted even if it shows Americans continue to find work and American companies keep creating new positions. The stock market is in a foul mood. It is convinced the Federal Reserve’s fight against inflation will not just slow down the economy, but trigger a recession.

“A recession in 2022 is not my base case,” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, told me last week. “There’s a lot of momentum in the economy today.”

And he pointed to the job market as evidence.

In the past year, over a half million jobs have been created each month. This is three times the average monthly rate in 2019 before the coronavirus pandemic began. Similarly, after the end of the Great Recession more than a decade ago, the job market was limping along. It was averaging only 160,000 new jobs a month.

“By any standard, that is in an incredibly powerful and strong economy moving forward,” Bostic said.

The May job market report will be released this Friday. Even a slowdown in hiring would still represent a booming job market.

It hasn’t regained all the jobs lost in the early weeks of the pandemic in spring 2020. That is likely to come sometime this summer. And an uptick in the unemployment rate may be a sign of relieving pressure on the tight labor market conditions instead of a warning sign of a looming recession.

The jobs data will reinforce the Federal Reserve’s efforts to curtail inflation by raising its target short-term interest rate. And that strategy is respectful as long as the job market continues growing.

Tom Hudson hosts ‘The Sunshine Economy’ on WLRN-FM, where he is the vice president of news. Twitter: @HudsonsView