For the first time in a long time, the recovery looks as if it might be starting to sputter a little bit.
Everywhere you look, after all, there has been less-than-stellar news recently. Consider the fact that the economy not only added a 75,000 jobs in May — 180,000 had been expected — but also that, after the latest revisions, it turns out it added 75,000 fewer jobs than we had thought in March and April. Or that the share of 25-to-54-year-olds who should be in the prime of their working years and are in fact working didn’t improve, either, last month and hasn’t for the past seven now. Or that, on top of all that, wage growth has slowed from where it was at the beginning of the year.
All of which is to say that if this has been the little recovery that could — chugging along at pretty much the same pace through fiscal cliffs and European debt crises and Chinese slowdowns — it might not be long until its I-Think-I-Cans turn into No-It-Can’ts. That, at least, is the story the data is telling us. It would be one thing, you see, if job growth was slowing down at the same time that wage growth was picking up. That’s what we would expect to happen once pretty much everyone who wants a job has one, which you would be forgiven for thinking might be the case when the unemployment rate is at almost a 50-year low. That, though, isn’t what we’re seeing. Instead, we’re getting slightly weaker job growth in conjunction with, yes, slightly weaker wage growth. Now that doesn’t mean a recession is imminent or even inevitable, but it does tell us two important things: first, that the recovery needs a little more help right now; and second, that the unemployment rate can still go a little lower if we do provide a boost.