Here's What The Jobs Report Isn’t Telling You

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**Ed Elson** (1:46)
Welcome to Prof G Markets. I'm Ed Elson. It is August 11th. Let's check in on yesterday's market vitals.
The major indices slipped on a lack of progress in Iran. Brent crude climbed. Treasury yields increased. Intel shares fell 4% after the company announced a $15 billion common stock offering to fund its AI efforts. And finally, Nvidia shares fell nearly 3% on news that the company is partnering with Wall Street for a $500 billion AI infrastructure financing package. Okay. What else is happening? The July jobs report came in much weaker than expected. The economy lost 23,000 jobs in July, far short of economists' expectations for 80,000 new jobs. And while the unemployment rate fell to 4.1%, its lowest level in two years, that headline also masks a somewhat troubling reality, which is that fewer people are participating in the labor market altogether. The labor force participation rate, which is the share of adults working or looking for work, fell to 61.4% in July, that is its lowest level since February 2021 Meanwhile, the labor department revised job growth in May and June downwards. In some, the labor market was weaker than we thought, and it might be weakening further. So joining us to discuss these jobs numbers, we are speaking with Kathryn Anne Edwards, labor economist and host of the Optimist Economy.
Kathryn, thanks for joining us on the show. The economy lost 23,000 jobs, the unemployment rate went lower, which seems good. But then you have this labor force participation wrinkle, which means it's bad. What do you make of this?

**Kathryn Anne Edwards** (3:37)
Oh, it's just bad. I don't think it's, I don't, there's not a lot of green shoots in this report. We lost jobs and people left the labor force, so there's not a ton of bright lines to draw there. You know, this is, this has been such an incredible economy over the past year and a half. And I've described it as the closest that a $30 trillion economy could be to standing still.
And, you know, we had a really dismal kind of back half of last year that started to look a little better in the front half of this one, but we've never seen consistent strength, consistent growth, and that has consequences in the labor market, both in kind of amplifying the security that other people feel, that they could expand their payroll, that they could take on more workers, as well as discouragement in the labor market. If, you know, if you can't find a job, lots of people you know are having a hard time finding a job, these type of echo chambers of both lack of confidence and lack of discouragement, they have their own cost. A report like this one really gives you a sense of just how strong we can still look while still being quite weak, which I know is such a vague economist thing to say.
But I mean by that, that the market's not crashing. Our economy isn't in freefall, but there's a difference between freefall and firing all cylinders, and we have been kind of stuck in the middle for some time. This report is just another example of that.

**Ed Elson** (5:07)
What would you say to people who say, well, GDP growth is growing, or that the stock market is hitting all time highs, both of which are true on those kind of surface level measures, it seems like things are going great. Is the place that we should really be looking at, should we really be looking at the jobs numbers? I mean, where is the real story being told in your view?