Today we got more economic news that indicates that the economy that we keep hearing is “improving” is, in reality, not doing much along those lines. The May jobs report showed that the economy added 431,000 jobs last month, but that number is not considered very good news for two reasons. First, economists were expecting the creation of significantly more jobs; estimates ranged as high as 750,000 new jobs, and the average estimate was well above 500,000 jobs. Second, the vast majority of the jobs — more than 90 percent — were temporary government jobs related to the 2010 census. In all, 411,000 of the new jobs were temporary census positions that will end later this summer, and when that happens all of those people will be back on the pavement.
The stock market plummeted on the bad employment news, as well as the unsettling debt news from Hungary. Anyone who pays much attention to the stock market these days is likely to get whiplash; the market is bouncing like a yo-yo. I think the reason is that the market is simply reacting to the daily news without much direction from underlying fundamentals. No one knows whether the recession is really over, whether the European debt crisis will be successfully resolved, or whether wars will break out in the Middle East or on the Korean peninsula. The uncertainty makes the market lurch up and down as investors try, unsuccessfully, to read the news each day as an indicator of long-term trends.
What is clear is that the economy is not “improving” — at least, not in a way that is very noticeable for the average citizens who care mostly about jobs. We would all be better served if economists kept their thoughts about the “improving” economy to themselves until we get several months of strong employment news.