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More on the April jobs report

Jeremy Hobson May 4, 2012

Jeremy Hobson: The big numbers this morning from the Labor Department are as follows: the U.S. economy added just 115,000 workers last month, and the unemployment rate dropped from 8.2 percent to 8.1 percent.
That’s where we’ll start now with our New York bureau chief Heidi Moore who’s with us live. Heidi, what else did this morning’s
jobs report say?

Heidi Moore: Sure. The most important thing is that the last jobs reports were revised — so we actually added 53,000 more jobs than we thought we did in February and March, so that’s a good sign. Private sector employment — that rose for the 26th straight month; 130,000 jobs and that is fantastic.

Also, the unemployment rate for African-Americans — which has been the largest unemployed group — is dropping a lot. So last month, it dropped 3.2 percentage points, and month-to-month it dropped one percentage point. So that’s pretty great.

Hobson: So some good news and some bad news in the jobs report, that’s Marketplace’s Heidi Moore in New York. And now let’s get some reaction from Chris Low, chief economist with FTN Financial. He’s with us live also from New York. Chris, what do you make of this report?

Chris Low: Well, yeah, I have to agree with Heidi. It’s not as bad as it looks on the surface right. So only 115,000 new jobs in April which is pretty lousy but in the context here to date, 200,000 jobs on average which is pretty much what we’ve taken to be the norm. The unemployment rate fell again, that wasn’t expected to, at 8.1 percent. But there I think is the rub because the unemployment rate is declining once again entirely because of a drop in the participation rate. Labor force participation rate in April was the lowest since 1981 suggesting that there might actually be a structural shift going on in the economy.

Hobson: What do you mean by that, a structural shift?

Low: Well, you know, normally what we see in a recession is cyclical weakness, that is caused by the recession that pretty quickly goes away. A structural shift would be a permanent change and the most likely places where that’s occurring is things like housing construction and mortgage finance, industries which have permanently shrunk because of the financial crisis.

Hobson: Let me ask you about one other thing Chris. There’s a lot of worry in places like, some of the economies of Europe about the unemployment rate among the young being higher than the overall unemployment rate. Are you seeing that here in the U.S. as well?

Low: We absolutely are. That situation isn’t quite as bad as it was a couple years ago but the youth unemployment rate is still extremely high and part of that might also be this permanent shift in particular if you think about the number of retail jobs that are migrating from the mall to the internet. Retail employment is the employment where people used to get their first jobs.

Hobson: Chris Low, chief economist with FTN Financial. Thanks as always.

Low: Thank you.

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