CARDIFF GARCIA, HOST:
Everyone, it's Cardiff. This is THE INDICATOR FROM PLANET MONEY. Stacey's traveling today. She'll be back on Monday. So for this episode, I'm joined by INDICATOR producer and social media savant Constanza Gallardo, Coco. Hello.
CONSTANZA GALLARDO, BYLINE: Hi, Cardiff. Happy jobs Friday.
GARCIA: Did I get your job title right - producer and social media savant?
GALLARDO: (Laughter) Yeah, sure. Of course.
GARCIA: Yeah. Coco, this summer has, in fact, started. Summer's when a lot of people slow down. They go to the beach. They work a bit less - except maybe for Americans. But most people work a bit less. And today, we have a summer slowdown indicator for listeners, but it's kind of a sad one.
GALLARDO: Yep. Today's indicator is 75,000. That's how many jobs the economy created in the month of May. It was not a great month.
GARCIA: No. No. That's not a good number.
GALLARDO: And it confirms that the labor market really has slowed down this year.
GARCIA: Yeah. Though as usual, we at THE INDICATOR like to look at these slightly longer-term trends. But even then, there are signs that the labor market really is weakening. So today on the show, is that something to worry about or is that just normal, given that we are now 10 years into the economic recovery? But first, Coco, I think this episode is missing something.
GALLARDO: Oh, yes, definitely. Our listeners know it, too.
GARCIA: From what I understand, we're trying out a new kind of sad, kind of moderately disappointed in the jobs report air horn today.
(SOUNDBITE OF AIR HORN)
GARCIA: OK. Let's go to break.
GALLARDO: Wait. Wait. Cardiff, so actually, jobs Friday is one of my favorite episodes to produce. And I thought it was time for you to have something. So you ready?
GARCIA: For me to have something?
GALLARDO: So here you go.
GARCIA: You brought me something?
GARCIA: All right. Let me open this up. Oh, it's an actual air horn.
GARCIA: It's an actual air horn. Hang on.
GALLARDO: You ready? Oh, my God. It's going to be really loud.
GARCIA: Is it really loud?
GALLARDO: Yeah, it's really loud.
GARCIA: This little tiny thing is really loud?
GALLARDO: Oh, yes.
(SOUNDBITE OF AIR HORN)
GALLARDO: Oh, no (laughter).
GARCIA: It's the thought that counts, Coco, 'cause this is one busted air horn.
GALLARDO: Very busted air horn.
GARCIA: I will never use this again.
GALLARDO: Never, please.
(SOUNDBITE OF MUSIC)
GARCIA: OK. So again, this was not a great jobs report for the month of May. We wouldn't say there is a positive way to read it necessarily. But there's a negative way to read it, and then there's a slightly less negative way to read it.
GALLARDO: Yeah. So here's the bad news, OK. So far this year, the U.S. economy has created an average of 164,000 jobs per month, including last month's low number. That's not bad. But last year, the economy was creating 223,000 jobs per month. So that's quite a slowdown.
GARCIA: And jobs growth is not the only indicator that has slowed down. Maybe even more of a problem is that wages are growing more slowly than they were last year. And this is especially disappointing because everyone had hoped that as the labor market got stronger and companies had to compete more to find workers, that companies would have to offer higher and higher salaries at a faster and faster pace. And for a while last year, that was happening, but that progress seems to have stopped - at least for now.
GALLARDO: So what's going on, Cardiff? What explains the slowdown?
GARCIA: Coco, you tell me.
GALLARDO: Why are we so bummed on the first jobs Friday of the summer?
GALLARDO: Well, there are a few possibilities. The first is that the trade wars are starting to have an effect on jobs. Remember - the U.S. and China have been raising tariffs on each other. And now the U.S. is threatening to raise tariffs on Mexico starting on Monday.
GARCIA: Yeah. And tariffs hurt American companies because they now have to pay more to import the components that they need to make their products. And companies also now find it harder to sell their goods to other countries, obviously, because those countries have raised tariffs on U.S. goods. So how much does this hurt the job market? Well, our old friend Martha Gimbel, who leads economic research at the Indeed Hiring Lab, also could not join us in the studio today.
GALLARDO: We miss you, Martha.
GARCIA: Yeah. Everybody's bailing on us today. Summer has started. Coco and I are here grinding away. But Martha did email us some interesting data. She notes that the parts of the economy most exposed to the trade wars are the sectors that make goods - physical stuff, like the manufacturing sector. And those sectors are creating jobs at a much slower pace than they were last year. So the trade wars might be having some effect there. That's not for sure, but the data are at least consistent with that possibility.
GALLARDO: The second possible reason that the labor market is slowing down is that it's not clear what the Federal Reserve will do next. The Fed can give the economy a boost by lowering interest rates, but nobody knows if that will happen. So far this year, the Fed has been signaling that it wants to wait to see what happens in the economy before deciding what to do. So there has been a lot of uncertainty about what the Fed will do. And it's possible that this uncertainty has also slowed down the economy.
GARCIA: Yep. And the final possible reason for the slowdown in the labor market - that it's normal, that it's expected, that the economy has been expanding for 10 years and that enough people have been hired already. So you would just expect the number of new people getting hired to slow down a little bit each month because there just aren't that many people left to hire. Plus, the economy got a temporary spark last year from the tax cuts that were passed at the end of 2017. But that spark was always expected to fade. And maybe what we're experiencing now is that fading. And so the economy has just transitioned into a new phase.
GALLARDO: And we left out one final possibility - that this is just a little blip and everything will be fine.
GARCIA: Yeah. We didn't leave it out anymore 'cause you just said it.
GALLARDO: (Laughter) We're going to be OK.
GARCIA: Yeah, just taking a little break.
GALLARDO: Yeah, summer break - because these kinds of slowdowns have happened several times in the last 10 years. And then the economy continued recovering. So maybe everything will turn out fine.
GARCIA: Yeah. And I think that means we can also close today's show, Coco, with the slightly less negative reading of today's jobs report. I want to be clear - this is not a positive reading of the report, OK, but here it is. The trend so far this year may not be good. But let's say that you were totally unaware of the trend and you could only take a snapshot of where the labor market is right now without seeing what happened before last month. Well, in that case, the picture wouldn't be that bad.
And what I mean is that, overall, unemployment is still pretty low. There are still a lot of job openings. And wages are still going up at a pace that's, yeah, not great but still decent. Now, I'm not saying that's the right interpretation of this jobs report, but if you're looking for a silver lining, that's kind of all I've got.
(SOUNDBITE OF MUSIC)
GALLARDO: So it's too early to know if things really are getting worse or if the labor market is just getting a little break.
GARCIA: Yeah, summer siesta.
GALLARDO: Yeah, a summer siesta. But we also want to know what you, the listener, thinks. So go to Planet Money's Instagram page and tell us what you think or THE INDICATOR on Twitter. We are @theindicator.
GARCIA: Do that, you will make Coco very happy.
GALLARDO: Very, very, very happy.
GARCIA: And finally, our friends on the Planet Money podcast last week did a great episode of how workers gain more power when the economy gets closer to full employment, which at least before this new jobs report did seem to be happening. That episode was hosted by our pal Kenny Malone, and it's called Quit Threat. Go check it out.
This episode of THE INDICATOR was produced by Rachael Cohn and fact-checked by Emily Lang. THE INDICATOR is a production of NPR.
(SOUNDBITE OF MUSIC)
GARCIA: I'm so excited to hear what the funky new air horn is.
GALLARDO: This is funny.
GARCIA: The summer air horn. It's going to be the best.
GALLARDO: It's not funky (laughter).
(SOUNDBITE OF AIR HORN)
GARCIA: Wait a minute.
GARCIA: That is not an air horn. What is that? That sounded like one of those ships passing by, you know.
GALLARDO: Because the jobs month was - the jobs report was not that good. So I guess the air horn is stuck (laughter).
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