Unemployment may have ticked higher to 4.7% in December, but it still remains just shy of the lowest level since August 2007. Better yet, since President Obama took office, the number of employed Americans reportedly jumped by 9.9 million.
But while it may sound like great news, remember this.
Over the last eight years, 14.6 million Americans also left the labor force, pushing the labor participation rate down to 62.7%.
Now, more than 95.1 million Americans are no longer counted.
And while wages have now grown 2.9% year over year, it’s still well below the 4% it was when the unemployment rate last hit 4.7%.
If we were truly that close to full U.S. employment, slack in the labor market should have been absorbed, and wages would be higher.
Part of the problem is the quality of the 155,000 jobs added in December 2016.
Many were only minimum wage. For example, 30,000 food service and drinking establishment jobs were added.
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Another 10,600 administrative and waste services jobs were added, as well.
If employment were truly improving, retailers wouldn’t be closing stores in record numbers or cutting thousands of workers either. Macy’s for example is closing 100 stories, wiping out 10,000 jobs. Sales at its stores fell 2.1% in November and December 2016.
That trend “was consistent with the lower end of our guidance, we had anticipated sales would be stronger,” said Macy’s CEO Terry Lundgren.
Sears Holdings is closing another 150 stores, too. Sales are down 37% since 2013 for a company holding $1.6 billion of debt.
In 2011, Sears had 3,555 stores. It’s now down to 1,503.
The Limited is immediately closing all stores nationwide.
While we can make excuses that Amazon.com is crushing brick and mortar, we must also realize that a stagnating economy is hurting them, too.
In the second quarter of 2016, the rate of homeownership hit 62.9%, its lowest level in 50 years. Luckily, it bounced back to 63.5% in the third quarter.
Headlines may cheer 4.7% unemployment, but we need more quality jobs to spur economic growth. That should be a top priority for the Trump administration.
However, I can assure you that no matter what happens next, The Cheap Investor will continue to uncover favorable and profitable low-priced stocks.