June 2, 2017 10:53 p.m. ET
If, as is customary, economic performance under a new president starts in the second quarter of his first year in office, then Donald Trump has not yet had his first 100 days, but about 60, a preliminary report card for sure. Based on April and May data, however, the economy looks barely different from that of his predecessor.
The employment report for May, released Friday by the Bureau of Labor Statistics, fell way short of consensus expectations. Not only did gains in nonfarm payroll employment run at a tame 138,000, against a consensus projection of 180,000, there were downward revisions to the two prior months’ figures. The average increase for May and April came to a lackluster 156,000. There are technical factors that resulted in May looking unusually weak, which augurs well for June. But even if June does shows a substantial pickup, the second quarter will still look mediocre.
The unemployment rate did tick down, from 4.4% to 4.3%, a cyclical low. But such declines are also business as usual, and have been fairly rapid because the share of willing participants in the labor force is unusually low. The labor force participation rate, the percentage of the civilian population 16 and over either working or actively seeking work, fell to 62.7% from 62.9%. At 62.7%, it’s barely higher than the 38-year low of 62.4%, reached in September 2015.
The building blocks of gross domestic product do signal that annualized growth will exceed 3% in the second quarter, up from 1.2% in the first. But a rebound from the first quarter to the second is also a repeat of past patterns. It will tell us next to nothing about Donald Trump’s claim that 3% growth will be sustainable under his administration.
WHAT DO COLORADO, UTAH, AND WISCONSIN have in common? Each is a state with a labor force of at least one million whose unemployment rate is more than a full percentage point below the national average. You might expect that these and other low-jobless states are the destinations to which people in search of better employment opportunities are moving. If job seekers do move to these states, there will tend to be a narrowing in the gap between the national unemployment rate and the unemployment rate in these states.
Based on some back-of-the-envelope research, I found evidence that there still seems to be an unusual amount of low-hanging fruit in these states that people seeking employment have yet to exploit.
Since the most recent state-level data are for April, I used that month’s national jobless rate of 4.4% as my baseline—in any case, it’s little different from May’s 4.3%. Bearing in mind the numerical differences among populous states and others, I first eliminated from contention the 14 states out of the 50 with labor forces below a million, a cutoff that excluded such places as Alaska, Delaware, Idaho, Montana, North Dakota, Rhode Island, and West Virginia.
Of the 36 states out of the 50 that have labor forces of one million or more, I found that 23 have unemployment rates that are at least a tenth-of-a-percentage point below the national average of 4.4%. They include Arkansas (3.5%), Colorado (2.3%), Iowa (3.1%), Minnesota (3.8%), Nebraska (3%), Utah (3.1%), and Wisconsin (3.2%). Job seekers who might especially want to move to these areas are residents of higher-than-average jobless-rate states, such as Alabama (5.4%), California (4.8%), Kentucky (5.1%), and Ohio (5%).
CURIOUS TO SEE HOW this same pattern looked in past cycles, I found that I was limited to just one, because state-level data go back only to 2007. But I was able to take the same snapshot in March 2007, before the Great Recession, when the national unemployment rate was also 4.4%. The spread at the low end turned out to be narrower. Of the same 36 states, just 18, rather than 23, had jobless rates at least a tenth-of-a-percentage point below the national average of 4.4%.
Also, a simple state-by-state average of the unemployment rates in these 18 states yielded 3.8%. In contrast, the average of the 23 in April of this year came to 3.6%. So not only are there more low-jobless states than there were a decade ago at the same national unemployment rate, the rate of joblessness in these states is even lower than it used to be.
In other words, there seem to be more destinations in the U.S. than there used to be for job seekers to move into high-demand labor markets, if only they would make the move. Homeownership is one factor that impedes job mobility, because homeowners are often reluctant to pick up stakes. But the share of households owning a home ran 63.6% in the first quarter of this year, way down from 68.5% in the first quarter of 2007.
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