Awhile back, an uptick in unemployment, as we saw in the June jobs report to 3.7 percent, would be cause for concern in the sense that it could signal the chances for a recession may be building.
Fast forward to 2019, over two years into President Trump’s term, rising unemployment, albeit modest, is being viewed as a sign of job demand. That’s because Labor Participation is rising as more Americans are coming off the sidelines looking to get back in the game, perhaps lured by a tight labor market and the option of higher pay and benefits.
“The reason unemployment ticked up is because we saw 335,000 people come back into the workforce, we haven’t seen a number like that in so long,” said Joanie Courtney, Chief Workforce analyst at EmployBridge.
Labor participation, now at 62.9 percent rose by 335,000 from May to June. The last time we saw a number nearly as strong was December of 2018, per the Bureau of Labor Statistics, when 419 people resumed their job hunt.
“That’s one of the biggest changes from the Obama era recovery and the Trump era recovery is that now the pie is getting bigger. It means more people can find a job” said Club for Growth President David McIntosh.
Despite the improvement in this metric, the BLS notes, these numbers can see big swings and June’s number is not a “statistically significant increase.”
Still, economists took note of the data point, as well as the overall strength of the June report. U.S. employers added 224,000 positions in June, blowing past expectations. The majority of the major sectors, with the exception of retailers and mining, added workers with the biggest gains seen in health care, transportation, and professional services.
“You’re getting people coming out the woodwork,” said top White House economic advisor Larry Kudlow during an interview on FOX Business Friday.
Despite the latest report re-enforcing a solid U.S. economy, President Trump renewed his call for an interest rate cut.
“We have a Fed that doesn’t know what they’re doing…but if we had a Fed that would lower rates you would have a rocket ship,” said Trump on Friday eluding to a potential trajectory for U.S. economic growth.