Despite positive employment reports from April, Macro Trends Advisors Founding Partner Mitch Roschelle says that the U.S. economy is on "shaky footing."
April's report from the Labor Department states that nonfarm payroll employment rose by 428,000, marking the 12th consecutive month that job gains were over 400,000. Additionally, the unemployment rate is at 3.6%, its lowest since February 2020. However, Roschelle told Fox Business that though the unemployment rate is "falling," the labor participation rate is as well, with the Job Openings and Labor Turnover Survey (JOLTS) reporting that there were 11.5 million job openings in March. As fewer people enter the workforce, Roschelle says, there are a tremendous number of open jobs, but no one is willing to take on those roles. This results in a "twisted labor market" where we "don't have truly full employment."
Additionally, surging inflation costs aren't helping the situation. In April, the consumer price index (CPI) rose 8.5% year-over-year (YOY) from March, the most rapid increase since December 1981. On top of that, February's hourly earnings went up 5.6% YOY. Roschelle says that the federal government may have been denying that there is an inflation issue by calling it "transitory." Unfortunately, he says, the problem may be more severe than we realize; job opening numbers are lulling the American public into a false sense of security.
"When you don't have truly full employment, which we don't, you don't really have that strong of an economy," Roschelle told Fox Business. "Which means we may not be able to weather this inflation storm as well as we hoped to."
Roschelle says that the only way to fix the economy is to improve supply chain issues, which will decrease inflation. However, he told Fox Business that handling the supply side of the economy "isn't really the Fed's issue." He adds that Congress needs to attempt to stimulate supply rather than stimulate demand.