Labor Market Remains Strong Despite Participation Rate Below Pre-Pandemic Levels

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The Bureau of Labor Statistics (BLS) at the Department of Labor found employers added 339,000 new jobs in May, according to a new report. Despite the new jobs, the unemployment rate rose to 3.7 percent in May, up from 3.4 percent in April.

Research Fellow Josh Bandoch said:

“America’s labor market remains strong, despite looming economic concerns. Strong data – 339,000 new jobs, plus nearly 400,000 more job postings – show that employers remain undeterred in looking for the people they need to grow and produce. All this despite stubbornly high inflation and concerns about a potential recession.

“Despite the good news, the labor force participation rate remains stuck at 62.6%, still below pre-pandemic levels. So, workers still aren’t being drawn in off the sidelines. The Fed has some tough decisions ahead.”

Senior Economist Ryan Young said:

“The economy was in good shape when the pandemic hit. Most of our economic problems since then are due to policymakers overreacting. The Fed went into hyper-stimulus mode and grew the money supply by 40 percent, which caused most of today’s inflation. Trillions of dollars of COVID-unrelated spending is hurting the economy more than it’s helping.

“It is mainly because the pre-COVID economy was so healthy that it has withstood the battering of a pandemic plus bipartisan binge-spending and regulating. That underlying strength should give the Fed the courage it needs to keep raising rates for as long as needed to get inflation back down.

“It should also inspire some more humility in Congress and President Biden. Their excesses are why the economy isn’t in nearly as good a shape as it should be.”