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Why May’s jobs numbers are undeniably good

May marked a record 92nd straight month of job growth in the U.S., featured better than expected wage growth, and unemployment fell to the lowest rate in 18 years. While America's economic engine appears to be firing on all cylinders, trade tensions and uncertainty are rising. Judy Woodruff talks with Neil Irwin of The New York Times and Diane Swonk, chief economist of Grant Thornton.

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  • Judy Woodruff:

    May marked a record 92nd straight month — or more than eight years in a row — of job growth in the U.S.

    We also see better-than-expected wage growth. And job openings are now at a two-decade high. This all comes as trade tensions are rising, the president is engaging in tough talk, and new tariffs on allies start today.

    Let's look behind the numbers now with Neil Irwin of The New York Times and Diane Swonk. She is chief economist at Grant Thornton in Chicago.

    And we welcome both of you back the to program.

    Diane, what is driving these good jobs numbers?

  • Diane Swonk:

    Well, we have got an economy that's accelerated in the second quarter. That's the good news. It's like a summer blockbuster. We have got a nice warming trend out there. And we got a lot of people going out.

    We saw retail employment really pick up. We also saw strong gains coming back from some very lackluster weather we had earlier in the year that we saw a snap-back, everything from building and materials, garden supply stores. And construction employment picked up. We really saw those specialty contractors pick up as well.

    So it was a really nice, solid jobs report, with broad-based gains, gains in things like manufacturing, most notably machinery. This is an area that's really important, because it reflects an investment trend in the U.S. economy that's been absent much of the expansion.

    Unfortunately, things like machinery and mining that also picked up this month are also most subject to the tariffs that we see on the horizon.

  • Judy Woodruff:

    And we're going to get to that in just a moment.

    But, Neil, you wrote in The New York Times today. You said "We ran out of words" how good these numbers are. Are they really that fabulous?

  • Neil Irwin:

    Look, I went to the thesaurus to find some alternatives to just saying these are good numbers.

    But I feel like every jobs reports for the last several months, that's what I want to say. These are good numbers. This has been a durable expansion nine years in, steady job growth, despite being nine years into the expansion. The unemployment rate back to the levels it was at in the year 2000.

    There's nothing not to like in these numbers. We just hope they can keep up this way.

  • Judy Woodruff:

    Diane, you pointed out — I know because I saw you quoted in some places — about wages. And I think people are wondering.

    Yes, they went up, what, 2.7 percent last month compared to a year ago. But some people are still asking, why is wage growth so slow?

  • Diane Swonk:

    Exactly.

    One the things is, I said it was like a summer blockbuster, but like the many summer blockbusters, the sequel is not as good as the original. And if you go back to 3.8 percent the last time we had it, wages were growing very rapidly.

    What we're seeing out there, 2.7 per cent is warming trend, but not a heat wave in wages. And we really want a heat wave. That's something the Federal Reserve really wants to see. And, unfortunately, we're seeing a little heat in inflation, instead of wages. And we'd like to see it the other way around.

    What is happening out there is everything from skills have eroded, we haven't had as much productivity growth. But also I think employers, it's been a really long time since they have actually had to look at workers other than commodities, instead of thinking of them as diamonds in the rough, invest in them and let them sparkle.

    We are seeing many employers put more money into training workers, but back in April 2008 — April 2000, the last time we saw this kind of unemployment rate, there were help wanted signs that literally read, "Now hiring, pulse required."

    (LAUGHTER)

  • Judy Woodruff:

    A remarkable moment.

    Neil, I want to turn to some, I guess, controversy today. The president himself tweeted this morning at 7.21 a.m. — this was a little more than an hour before these numbers came out.

    And I'm going to quote. He said, "Looking forward to seeing the employment numbers at 8.30 this morning."

    This has caused quite a stir among economists. Why?

  • Neil Irwin:

    Yes.

    So, these numbers, it takes weeks to prepare them. But they're kept under lock and key. It's a very sensitive thing, because they move markets. The dollar, the bond market, the stock market all swing dramatically when these numbers are released.

    So they're kept very confidential, locked doors, not spread widely. The president does get the chance to learn about them the evening before. The problem is, if this becomes routine, if the president kind of tips his hand or hints about what's going to come, it could be very destabilizing to markets.

    And the idea that there wouldn't be this kind of predictable 8.30 a.m., at exactly the — everybody gets the numbers at the same time, knows exactly how to interpret them, we want that predictability, especially if we find ourselves in a crisis or recession, when these numbers, really, markets turn on every decimal point.

  • Judy Woodruff:

    Diane, there are even some critics out there who are saying the president broke the law when he did this. What is the rule?

  • Diane Swonk:

    Well, the rule is that we don't see any government agencies talk about the numbers at all an hour around the numbers.

    And I think that's really important is because I work with the National Association for Business Economics, the Statistics Committee. I work with these institutions.

    And part of the reason for keeping that sort of time frame out there, not having advanced information, all the reasons that Neil suggested are absolutely true, but also very important is the integrity and credibility of the data.

    The data gets politicized once it comes out. There's just no — no matter who's going to be running, if it's a bad number, people are running against that person, they are going to talk about the bad number. If it's a good number, they're going to tout it as a good number and take credit for it. It gets politicized.

    But to feed this idea that the data is somehow influenced by an administration, any administration, is something you want to really stay away from.

    So the credibility and integrity of the data and the institutions that produce it are also coming under question when this is done. And I think that's incredibly important, because we already see all these conspiracy theories.

    And I'll tell you, I spent a lot of time with these statisticians. You got to drink when you're with them because they're really that nerdy.

  • Judy Woodruff:

    Neil, I do want to come back to trade.

    And that is, we have been hearing, yes, there are going to be tariffs, no, they're aren't, they're going to be here and there.

    And, yesterday, the administration now has imposed tariffs on American allies, on European Union, Canada, Mexico, aluminum and steel. What does that represent, actually?

  • Neil Irwin:

    Look, what's worrying about these tariffs is, it's not the direct economic effects. Steel and aluminum imports aren't that high relative to the entire economy.

    It's what it signals about U.S. trade policy and U.S. as a place do business. The administration is flirting with trade wars on multiple frontiers all at once, With Europe, with Canada and Mexico, with China, with Japan and Korea.

    It's hard to go to war with the entire world at one time. And this lack of predictability of what is American trade policy going to look like, what is the business environment, is very risky and damaging for businesses that have to expand and think about things for the long run.

  • Judy Woodruff:

    You wrote today, Neil, that it's the unpredictability of it, then, in the long run that can do more damage than the tariffs themselves.

  • Neil Irwin:

    Exactly.

    We don't know what the regime is going to be in five years around the trade with Mexico and Canada or the European Union. And that's not something you would have said at any point in the last 50 years. And so that's a difficult moment for businesses.

  • Judy Woodruff:

    So much to follow today.

    Neil Irwin of The New York Times, Diane Swonk of Grant Thornton, thank you both.

  • Neil Irwin:

    Thanks, Judy.

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