CNBC ^ | 4 May 2012 | Peter Morici
The unemployment rate fell to 8.1 percent because another 522,000 adults quit looking for work and are no longer counted.
In the weakest recovery since the Great Depression more than four-fifths of the reduction in unemployment has been accomplished by a dropping adult labor force participation rate—essentially, persuading adults they don’t need a job, or the job they could find is not worth having.
In the first quarter, growth slowed to 2.2 percent and was largely sustained by consumers taking on more debt, and additions to business inventory.
Gains in manufacturing production have not instigated stronger improvements in employment largely because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.
And concerns about the durability of the recovery and health care costs when Obama Care is fully implemented make employers very cautious about adding to headcount.
Overall, the situation with the yuan is the single largest impediment to more robust growth in manufacturing and its broader multiplier effects for the rest of the economy; the Obama Administration indicated it has no intention of challenging China on this issue, but presumptive GOP standard bearer Mitt Romney promises a harder line.
Factoring in those discouraged adults and others working part time for lack of full time opportunities, the unemployment rate is about 14.5 percent. Adding college graduates in low skill positions, like counterwork at Starbucks, and the unemployment rate is likely closer to 18 percent
Growth is weak and jobs are in jeopardy, because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations, and costly health care mandates do not address structural problems holding back dynamic growth and jobs creation—the huge trade deficit and dysfunctional energy policies.
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