The job report for April has just been released. Contrary to every forecast, the actual number of jobs created far exceeded expectations and shows that the Trump expansion is gaining momentum.
In April, the U.S. economy added 263,000 jobs. The unemployment rate dropped to 3.6% which is the lowest rate in nearly 50 years.
This likely shows that not only is the economy growing at more than a 3% rate, but the growth rate could accelerate this year. President Trump’s economic policies continue to reverse the growth-stifling policies of the prior administration.
Moreover, the unemployment rate fell for almost every demographic except for teenagers. While the unemployment rate for all adults is 3.3%, the unemployment rate for teenagers is 13%. The high rate for teenagers is mostly due to a number of states raising the minimum wage. In many cases, the minimum wage has increased to $15 per hour.
Since the value of an unskilled worker is usually much less than $15 per hour, the number of jobs available to unskilled teenagers has been reduced. At the same time, the $15 wage rate is attracting more teenagers to enter the workforce rather than seek additional education or skills. More workers seeking jobs coupled with fewer jobs available leads to higher unemployment.
Is a recession coming anytime soon?
Many economists argue that it has been eleven years since the last recession started. Historically, business cycle behavior indicates that the economy experiences a recession once every seven to ten years. Indeed there was a recession in 1981, another in 1991, another in 2001 and the last recession started in 2008.
However, usually, a recession lasts less than one year. Then the economy moves to the recovery stage which typically lasts about a year or two. Then the economy enters expansion when annual economic growth is the highest. The expansion usually lasts four to six years. During the current business cycle, the duration of the recovery stage was much longer.
The recovery started in mid-2009. The administration should have set economic growth as the top policy priority. Instead, the Obama administration concentrated on curing perceived social injustices. The result was that the economy…