The Government’s April Jobs Report, and Ours: Why Don’t Things Look Worse?

On Friday, May 8, the Bureau of Labor Statistics (BLS) reported that the official unemployment rate for April was 4.3%. By conventional standards, that is close to full employment. It is hard to believe that an economy that has been hammered by high tariffs and hyper-inflation in gas prices is in good shape. But other indicators are also positive. We are not in a recession.  And initial weekly claims for unemployment benefits are rather low. Since late December, they’ve usually been under 215,000 a week. Layoffs haven’t risen. In these ways, despite a war that is raising gas prices and sending more income to other nations, recent employment numbers have not shown a significant downturn. Perhaps it just takes more time for the negative effects of higher prices to work their way through the economy. Wholesale/Producer Prices are rising fast and that should show up in consumer prices soon.

Meanwhile, the Usual Situation is Always Worse Than It First Appears

NFJAN’s Full Count shows a real unemployment rate of 10.4% and 18.4 million unemployed or underemployed people. These two numbers are a deeper gauge of where we are than the official unemployment rate. And even subsets of the official count indicate serious problems. For example, the official unemployment estimate for African Americans in April was 7.3%.  For African-American teens it was 22.7%. These are really bad numbers. But things may be worse. If these specific official rates underestimate the real numbers the way the overall official unemployment rate underestimates real overall unemployment, then real unemployment for these two groups may be 15% and 45%. If such numbers are close to the truth, they are shocking, and especially for a period of generally low unemployment.

And surely, if times are tough enough that 22.7% of a group say they want work, are looking for a job, and cannot find one, there must be other people who would like a job but, given the high number of unemployed workers in the group, have not bothered to search. High unemployment may discourage some people from searching for work.

In general, the official jobs report for April looked pretty good, but the media is rife with bad economic news. Trump’s tariffs and the war on Iran are lifting prices. The Consumer Price Index for January and February of this year was only 2.4% higher than for the same months in 2025. But the March and April rates were 3.3% and 3.8% higher than a year ago. Not so bad? If you aren’t on a tight budget, perhaps so. And if you don’t have to drive much. People are trying to economize by driving less and cutting back on other things. Eventually, spending cutbacks will begin to affect sales and employment at home. Not all the money that we spend ends up in Iran and China. Official unemployment rates will then begin to rise.

What is the state of the U.S. economy as a whole?  Is it growing? In the second and third quarters of 2025, real growth in the Gross Domestic Product came in at the solid rate of 4%. But fourth-quarter growth was a pathetic 0.5%, in part due to the government shutdown. In the first quarter of this year, growth was positive but tepid at 2%. On the whole, even the months before the war were not a boom time. The growth rate for April-June will probably be pretty low.

And there are worrisome long-term trends. The whole of 2025 was lousy for non-farm job growth. Federal job cuts did not help, but the crisis was broader. The level of non-farm jobs is based on numbers the BLS acquires from employers. In 2025, the monthly increase in non-farm jobs was often negative, and on average jobs grew by just a few thousand per month. The bar graph for monthly job changes in 2025 is pretty shocking. There was modest improvement in the last few months, but nothing to write home about.

Overall, layoffs have been on the low side, but hiring too is below normal. It is still, relatively speaking, a low-hire, low-fire labor market. Employed workers may be a little less adventurous about finding new jobs. The quit rate is a bit lower in 2024-26 than what it was in the two years before the pandemic (2018-2019).

Remember: Always Look on Bright Side of Life

On the bright side, some experts are predicting a future of labor shortages. We have heard that one before. Has such a thing happened in peacetime in modern history? In the mid-1960s, Vietnam spending pumped up an already improving economy. How full employment would have been without war spending is not clear. It seems to me that there are almost never general labor shortages in America during peacetime.

But now assaults on immigrant workers and a rising number of retirements promise to bring a relative shortage of workers. There are solutions. One is obvious. Better compensation and working conditions would draw more workers. Good luck with that. Also, there is one negative solution already underway. Employers are replacing workers with AI instruments. From personal experience, I know that these robots can make it hard for customers to complain and get help over the phone, but the robots themselves do not seem to be complaining about their compensation and working conditions. Some day they may do so. They can already kinda think. Some of them are even being taught to dance, so who knows what is next.