On the May Jobs Report

A disastrous jobs report. If it weren’t for a downward revision of 59,000 payrolls, the May headline would not be a meager gain of 38,000 but a contraction of 21,000. Almost half a million persons evacuated the labor force, half of them from among the ranks of the long-term unemployed. The number of persons working part-time involuntarily, Yellen’s favorite indicator of labor slack, rose by almost half a million. So much for the Beige Book’s “tight labor markets,” and for any chance of the Fed hiking rates any time soon. We don’t see this as alarming new evidence of recession. Labor markets lag, and this is an echo of the mini-recession caused by too-low oil prices. With oil recovered, that is over with. This is a classic case of “bad news is good news.”